Hazelle
in Memos & Musings · 3 min read
The Joyful Investors and AlphaInvest are proud to kick off a new Corporate Highlight series, offering investors exclusive insights into the strategies of listed companies.
In this inaugural feature, we sat down with Mr Gerry Chan, CEO of CapitaLand China Trust (CLCT), to discuss the REIT’s strategic approach to leverage the long-term structural transformation of the Chinese economy while effectively managing current market challenges. From evolving consumer trends to financial strategy, Chan provided thoughtful insights into CLCT’s multi-asset business and long-term vision.
A meaningful exchange on China’s real estate landscape and trends with Gerry Chan, CEO of CLCT
Adapting to Evolving Retail Trends: A Focus on Experience and Localisation
CLCT’s retail strategy is driven by real-time consumer data analytics provided by the commercial management arm of its Sponsor, CapitaLand Investment, which operates about 40 malls in China. Chan identified key trends shaping the retail landscape:
- Increasing consumer preference for experiential retail offerings such as F&B, toys, and souvenirs over fast fashion and beauty.
- The rise of “Guochao” (“国潮”) or brand localisation – with Chinese consumers demonstrating a growing preference for homegrown brands including Luckin Coffee and Anta over global names such as Starbucks and Nike.
- Digitalisation and omni-channel retailing are essential with traditional retail formats like supermarkets needing to adapt more rapidly. CLCT is proactively reconfiguring underperforming spaces formerly occupied by anchor supermarkets to introduce higher-yielding tenants that are more aligned with current consumer preferences.
These strategic improvements optimise tenant mix, enhance the overall shopper experience and uplift asset performance.
CapitaMall Xizhimen (Credits: CapitaLand China Trust)
Unlocking Synergies Across Asset Classes Amidst a Softer Market
Beyond its retail portfolio, CLCT is building synergies across its business parks and logistics parks, which collectively contribute approximately 30% of its gross rental income. While these asset classes present growth potential, they are currently operating within a more subdued market environment.
“There has been a large supply coming into both the business parks and logistics parks sectors in recent years, which has moderated demand,” Chan explained.
Occupancy rates remain stable, with business parks maintaining over 80% occupancy and logistics properties performing slightly stronger at around 90%.
Despite these near-term headwinds, Chan emphasised that CLCT’s diversified platform fosters natural synergies across asset classes. Case in point, Chan illustrated how young entrepreneurs in China — many of whom start with online businesses — can seamlessly scale their businesses within CLCT’s ecosystem. Starting in business parks, expanding into logistics parks, and eventually exploring the establishment of a physical retail presence through pop-up outlets or permanent stores in CLCT’s malls, tenants benefit from a comprehensive growth pathway.
“Our diversified asset base enables tenants to expand their operations across multiple stages, all within our ecosystem,” Chan explained.
Enhancing Capital Efficiency and Cultivating New Growth Engines
CLCT remains focused on strengthening its financial position while positioning itself for sustainable growth. A pivotal initiative is the REIT’s participation in the proposed listing of a China onshore retail REIT (C-REIT) vehicle, which will provide CLCT access to China’s vast and liquid domestic capital markets. This also allows CLCT to recycle mature assets and reinvest proceeds into higher-growth opportunities.
“This is a captive market due to capital controls,” Chan explained. “At the same time, there are limited high-yield investment options within China, with government bonds and deposits yielding well below 2%. Hence, a C-REIT offering yields between 4% to 5% becomes highly attractive, especially when supported by CapitaLand Investment’s strong market presence and proven retail management expertise.”
Additionally, CLCT is actively rebalancing its capital structure to reduce funding costs and improve currency matching. It has been increasing its RMB-denominated debt to approximately 40% of its total borrowings, with plans to raise this to 50% by December 2025.
“In October 2024, we issued a RMB400 million bond at an attractive coupon rate of 2.90%, and followed up with another RMB600 million bond in April 2025 at an even lower rate of 2.88%,” Chan highlighted.
These moves allow CLCT to capitalise on declining interest rates in China, which will effectively lower the overall cost of debt, while naturally hedging its RMB-denominated assets.
Long-Term Vision: Diversified for Resilience
Looking ahead, Chan envisions CLCT as a China-focused, multi-asset REIT that delivers stable distributions by further diversifying into resilient asset classes, enhancing its ability to navigate market cycles.
While the short-term outlook is tempered by geopolitical tensions and a softer economic environment in China, Chan remains confident that, China will continue to be a major force in the global economy over the long term, especially in Asia Pacific and the technology sector.
“Despite recent market volatility, China’s long-term secular growth trajectory remains intact,” said Chan. “We want to be the preferred REIT for investors seeking meaningful exposure to China’s dynamic growth opportunities.”
Credits: CapitaLand China Trust
About CapitaLand China Trust
CapitaLand China Trust (CLCT) is the first and largest China-focused S-REIT listed on the Singapore Exchange since 2006. It currently manages a portfolio of 18 assets across China, with an AUM of approximately S$4.2 billion, comprising retail malls, business parks, and logistics properties.
CLCT is sponsored by CapitaLand Investment, a leading global real asset manager with over 30 years of operating experience in China. This deep-rooted presence and operational expertise enable CLCT to navigate local market dynamics effectively while unlocking long-term value for investors.
“We position ourselves as a trusted proxy for investors to participate in China’s domestic growth opportunities,” said Chan.
This corporate highlight is brought to you by a joint collaboration between AlphaInvest and The Joyful Investors.
@thejoyfulinvestors From retail to logistics to business parks, dive deeper into how CapitaLand China Trust is adapting its game plan to ride China’s evolving growth story. 🇨🇳 #REITs #CapitaLandChinaTrust #ChinaREIT #InvestmentStrategy #TheJoyfulInvestors #InvestingNote #FinancialEducation #REITWatch #MarketInsights #SGX #ChinaEconomy #ChinaGrowth #financetiktok ♬ original sound - The Joyful Investors
About Hazelle
Chief trainer of The Moneyball Investors Playbook program and founder of The Joyful Investors, a financial education firm that seeks to help avid investors learn to invest better and make the journey a joyful one. I graduated with a first class honors in Bachelor of Accountancy from Nanyang Technological University (NTU) and started my auditing career in one of the Big Four. I believe that once we know how to build our wealth sustainably, we can then live our best lives ever.
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