SINGAPORE-BASED Mapletree Investments Pte Ltd, one of Asia’s leading property development, investment and management companies, manages and owns assets in excess of S$30 billion (US$22 billion) across Asia, Australia, Europe and the US.

Mapletree is wholly owned by Temasek Holdings, and now manages four real estate investment trusts listed in Singapore, five private property funds and owns a diverse portfolio that includes office, retail, logistics, industrial, residential and corporate lodging/serviced apartment properties. Mapletree also owns a portfolio of student accommodation properties in the UK, which it acquired recently.

China is the company’s largest overseas market and a key element in its growth plans. In a recent interview with Shanghai Daily, Quek Kwang Meng, Mapletree regional CEO for China and India, shared some of his views on opportunities in China’s real estate market. The 25-year property veteran also discussed emerging trends in the industry.

Q: When did Mapletree first enter the Chinese real estate market, and how large is the group’s current portfolio here?

A: Mapletree entered the Chinese real estate market in 2005 and has been growing steadily in tandem with market demand. In a portfolio comprising logistics, industrial, office, retail and mixed-use real estate in more than 15 cities — including Hong Kong, China is Mapletree’s largest overseas market. The Chinese mainland accounted for 15 percent of the group’s total owned and managed assets (at about S$4.3 billion) in the fiscal year ended on March 31, 2015. Hong Kong accounted for about 22 percent, at S$6.2 billion. We currently employ over 400 staff in China and this number will be growing as we further expand.

Q: China now constitutes more than one-third of Mapletree assets. How fast do you expect your China business to grow and what will be your major growth engines?

A: Our group has set a key performance target to double our assets under management within the five-year cycle that began in the 2014-15 fiscal year. In China, we will continue to focus on first- and second-tier cities. Although we are seeing challenges in the residential and retail markets, we believe opportunities still exist. Our fastest growth engine in China at the moment is logistics. We acquire one or sometimes two pieces of land every month. They are located all over the country, following demand for it.

Q: What do you mean by “challenges” in residential and retail markets?

A: We observe that customers are changing their shopping patterns and they now prefer online shopping. Furthermore, there is an oversupply of retail malls in certain cities, so both are concerns for landlords and retailers. As for the residential market, honestly speaking, there isn’t much differentiation with regards to facilities and even service. Mapletree has the strength to build mixed-use projects, and our strategy now is to tap on niche sectors to differentiate ourselves, for example health care and education. These two sectors are increasingly important for the Chinese market and we hope to tap into this trend as well by becoming the real estate partner of health care and education players in the country. These are concepts we are testing out in our Ningbo and Nanhai mixed-used developments.

Q: How does Mapletree view the overall property market in logistics in China? What are the challenges you face?

A: Mapletree first entered China through the logistics sector before expanding into other asset classes. We continue to see China as a bright spot for growth in this segment due to significant demand for modern logistics facilities, backed by a growing consumer market. We have plans to expand our logistics footprint — standing at close to 40 projects to date — to more cities, such as Beijing, and to provinces such as Sichuan, Anhui, Guangdong and Fujian. Our main challenge is in acquiring land parcels.

Q: So what are the obstacles in land acquisition?

A: Actually, China’s land-use policies have changed to be more open to logistics developments. Historically, local governments favored making industrial land available for factories and business parks because they generate more tax revenue as compared to warehouses. This is now changing in some cities. Dalian, for example, is aiming to capitalize on its deep water port, and looks to logistics as the service sector industry to balance out its historical reliance on manufacturing. Mapletree has been striving to tap these trends. By end of fiscal year 2016/17, Mapletree will have S$2 billion worth of China projects in the pipeline and bring 1.5 million square meters of GFA (gross floor area) onto the market.

Q: Will Mapletree seek partnerships with local developers in China?

A: We are definitely considering forging partnerships to accelerate our growth. One of the things we would like to do is to work with local developers rather than competing against one another. We have worked with some local partners, such as manufacturers who have land resources and know local people and governments well.

Q: Can you tell us more about your Shanghai project in Minhang District?

A: With an investment of 5.5 billion yuan (US$846 million), Mapletree Business City Shanghai and VivoCity Shanghai constitutes our single largest investment to date in China. For the first time, we are incorporating two of Mapletree’s award-winning flagship brands in a single location. The 300,000-square-meter project, located where two Metro lines cross, will consist of three phases and include seven office blocks and a retail mall. We are good at decentralized mixed-use projects. To do something of the same size in a central part of the city would be very difficult and very expensive. Multinationals and large Chinese companies are looking for alternative office locations to contain costs. Our Minhang project creates a self-sufficient community that combines work and play in one location. We believe, if we build the right quality project in the right place, demand will come.

Q: Besides decentralization, are there any other industry trends you see in China’s property market?

A: We are seeing more opportunities in urban renewal projects in first-tier cities, and also a trend of end-users looking to be asset light especially in the logistics space. The latter allows us to establish partnerships, where we buy properties from end-users and do sale-and-leaseback agreements; retrofit/redevelop the properties into developments for multi-tenant use and so on.