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Three Things To Like About CapitaLand

Capitaland_logoIt has its finger in shopping malls. It has its finger in residential property. It has its finger commercial real estate. That is the first thing to like about CapitaLand (SGX: C31). The company might be a highly-focussed property developer but it is also reasonably diversified interest across the commercial, retail and residential sectors.

Whilst the three property sectors are unquestionably associated with real estate, they can behave quite differently at different points in the economic cycle. In other words, each sector will be affected by its own unique supply and demands characteristics. After all, you can’t easily run a shop from your living room and you can’t easily live in an office.

The second thing to like about CapitaLand is that it can be a convenient way to get access to one of the four asset classes. In the main, there are only four asset classes available to investors, namely, cash, bonds, property and shares. An investor who might want a higher exposure to property could either buy a piece of real estate outright or consider property shares. The latter could provide exposure without a heavy outlay at the outset.

Investing in property through shares could also allow an investor to adjust the amount exposure to real estate. Put another way, it is easy to adjust the weightings of property in a portfolio by selling a few shares at a time but it is almost impossible to sell a property brick by brick.

The third thing to like about CapitaLand is its wide geographic spread. Around a third of the company’s revenues are generated in Singapore, a quarter in China, a further quarter in Australia. The rest of its revenue is derived from Europe and other Asian cities. Whilst a wide geographic spread will not protect CapitaLand from systematic risk, it could be the next best thing to not having all your property eggs in the same basket.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.