DEREK GOH, GENeRAL COUNSEL, GUOCOLAND
Heading the legal function for regional property conglomerate GuocoLand, general counsel Derek Goh discusses expansion, IPOs and finding success in the face of a burgeoning regulatory regime.
GC: Could you start off by telling me about GuocoLand and its business?
Derek Goh: GuocoLand Limited is listed on the Singapore Exchange and is the property arm of the Hong Leong Group of Malaysia. Our principal businesses are property development, property investment, property management and hospitality. Currently, GuocoLand operates in Singapore, China, Malaysia, Vietnam, United Kingdom and Australia.
Our portfolio ranges from single component residential developments to signature large-scale integrated developments, which comprise residential, commercial office, retail and hospitality assets in prime locations. Our flagship multi-billion dollar integrated development, Tanjong Pagar Centre in Singapore, was completed in 2016. The development spans 1.7 million square feet and is comprised of a 38-storey Grade A office block, six levels of premium retail and F&B space, 181 residential apartments, a Sofitel hotel and an urban park. It is a landmark that has transformed the area and is the tallest building in Singapore at 290 metres.
In China, we have developed projects in Beijing, Shanghai, Nanjing and Tianjin. In November 2016, GuocoLand acquired four land plots in Chongqing for mixed-use development. GuocoLand owns and operates our own hotels in China and Malaysia. In addition, we have two hotels operated by Accor under the Sofitel brand.
GC: How significant is GuocoLand’s presence across the rest of Asia Pacific and what legal structures do you have in place to support those markets?
DG: We have a strong presence across Asia with active investments in Singapore, China, Malaysia and Vietnam. Our subsidiary in Malaysia, GuocoLand (Malaysia) Berhad, is listed on the local stock exchange and it has, over the years, established a proven track record as a prominent property developer of residential townships, and commercial and integrated development projects in Malaysia.
In Vietnam, we have developed an integrated mixed-used development in the Binh Duong Province, located about 20 kilometres from Ho Chi Minh City.
I lead a legal team of 13 lawyers spread over Singapore, China and Malaysia. It is a good number and necessary to support the volume of work we have in these countries. My philosophy is to provide value-add, proactive and effective legal support to the business units, while striving to minimise the use of external counsel to the fullest extent possible. Because of the differences in how these jurisdictions operate legally, as well as the unique requirements of each, frequent travel to touch base with the rest of the team is essential. We also have a digital portal in which we store precedents and legal information, which can be shared by the in-house lawyers.
GC: From your perspective, how has the market for real estate changed for major developers such as GuocoLand since the global financial crisis?
DG: The market for real estate has changed significantly in recent years within the countries we operate. Following inflation of property prices and an over-heated housing market, since 2009, the Singapore government has introduced a slew of cooling measures in an effort to temper surging real estate prices and curb a property bubble from forming. The measures include additional stamp duty imposed on local buyers, permanent residents and foreign buyers of residential properties; restricting financial institutions from lending to an individual if his or her outstanding debt repayment exceeds 60% of gross income; as well as loan-to-value limits. The measures introduced have undoubtedly stabilised the market and were necessary and prudent moves.
We have also seen similar measures such as higher mortgage down payments and home purchase restrictions imposed across Tier 1 and major Tier 2 cities in China to rein in surging residential property prices. Developers have had to adapt and be resilient in the wake of these cooling measures.
GC: How has the market reacted to the changes implemented?
DG: As expected, there was initially a knee-jerk reaction and a dip in sales experienced in the real estate industry. Nonetheless, GuocoLand’s focus has always been on quality products in good locations, and for discerning buyers, the location, quality and the reputation of the developer are of paramount importance. As a result, we have seen a good and steady take-up rate for our residential units in Singapore and China. There is still ample liquidity and pent-up demand in the market for quality products, and we remain optimistic moving forward.
GC: As part of GuocoLand’s desire to expand further abroad, what measures are you taking on the investment front?
DG: GuocoLand is continuing to scour for good investment and development opportunities. With substantial exposure in Asia, we recently expanded into the UK and Australian markets through a strategic 27% stake in Eco World International Berhad, a property company listed in Malaysia. Eco World International has development projects in prime locations in London, Sydney and Melbourne. We are also keen to invest in these markets in our own right, and our strategic investment in Eco World International will no doubt prove us with a springboard. In the meantime, we will continue to evaluate and explore other new markets for opportunities for growth.