Frasers Centrepoint in rebranding move

Source : Business Times - 13 Sep 2008

It wants a new name and fresh look to gel better with its increasing push overseas

A MAINSTAY on the Singapore property scene, Frasers Centrepoint is going for a new name and a fresh look as it moves to conquer markets abroad. The company is reviewing its brand to reflect its global perspective.

PREPARED FOR THE WORST - Mr Lim says that Frasers Centrepoint will just hold onto its landbanks, where market sentiment is bearish, until recovery

‘We want to continue to push overseas,’ says chief executive Lim Ee Seng. ‘In future, more and more of our revenue will come from overseas.’

In 2006, the then-Centrepoint Properties was renamed Frasers Centrepoint to better reflect the link to parent company Fraser & Neave, one of Singapore’s biggest conglomerates. But when Frasers Centrepoint grew its assets abroad, it found that the Centrepoint name was far from unique.

‘There were always other companies called Centrepoint - in Sydney, in Bangkok, in the UK,’ says Mr Lim. In the UK, for example, Frasers Centrepoint shared the Centrepoint name with a coal-mining company and a security firm.

The solution? Frasers Centrepoint has rebranded itself Frasers Property.

‘For now, the main challenge is finding the right talent. We have to find the right people in each country to take charge, to work independently. Property is a very local business, so the people on the ground in each country should also be locals whenever possible.’

According to Mr Lim, the continuing rebranding exercise and the name change underscore how serious the company has become about building its overseas presence.

The numbers speak for themselves. In the first half of its 2008 financial year, 39 per cent of the developer’s assets were abroad. Some 15 per cent of Frasers Centrepoint’s $8.3 billion portfolio was parked in China, the biggest overseas market. Australia and New Zealand together accounted for 12 per cent of assets, while 9 per cent were in the UK. The remaining 2 per cent were in various countries, including Thailand, Vietnam, Malaysia and the Philippines.

By contrast, in 2005, just 22 per cent of total assets were overseas. Back then, the company had total assets of $4.4 billion.

There is no doubt that Frasers Centrepoint has become the most important unit in Fraser & Neave’s stable. For F&N’s third quarter ended June 30, 2008, property development accounted for 60 per cent of net profit before exceptional items. This was despite the food & beverage business being the largest contributor to the top line.

To build on this strength, Frasers Centrepoint has been quietly working to consolidate its overseas presence in the past three years. In the UK and Australia/New Zealand, it has set up holding companies and built up its teams. These steps were taken for ‘tax reasons’ and to allow the units to function more effectively.

Yet, for all his bullishness, Mr Lim is well aware of the challenges that Frasers Centrepoint and its fledgling overseas spin-offs face amid the current global slowdown.

The main problem is poorer liquidity from banks, he says. And perhaps more immediately, many overseas markets are gripped by poor buyer sentiment. ‘This is a problem even in markets where the problems are not serious, where all the fundamentals are actually okay - such as Australia,’ says Mr Lim.

In light of this, Frasers Centrepoint will take a step back in some foreign markets. In the UK, the company has a pipeline of 2,700 homes that were supposed to be delivered in the medium term through direct development or via joint ventures. Some of these projects will now be put on hold until the market turns.

In Australia and New Zealand, on the other hand, Frasers Centrepoint will go ahead with projects because prospects don’t look as bad. ‘The financial markets have been hit but interest rates have come down,’ says Mr Lim. ‘There is also a shortage of apartments in Australia, especially in Sydney.’

Frasers Centrepoint has a pipeline of about 5,000 residential units and about one million square foot of commercial space to be delivered over the medium term in Australia and New Zealand.

Things are murkier when it comes to China, where the company has a pipeline of close to 12,000 homes and about six million sq ft of commercial space in the medium term.

But in any case and in all the markets where Frasers Centrepoint is present, ‘if worst comes to worst, we will just hold onto our landbanks until recovery’, Mr Lim says.

For now, Frasers Centrepoint’s main problem is finding the right people to staff its offices as it expands.

‘We have to find the right people in each country to take charge, to work independently,’ says Mr Lim. ‘Property is a very local business, so the people on the ground in each country should be locals whenever possible.’