GuocoLand may not have mentioned it in its results announcement for FY2024 ended June 30, but the mainboard-listed real estate group had notched a second consecutive year of record revenue. At $1.82 billion, GuocoLand F17’s full-year revenue stood 18% higher y-o-y than the $1.54 billion logged in FY2023.

Both the group’s “twin engines” of property development and property investment notched strong growth y-o-y. In FY2024, property development revenue grew 16% y-o-y to $1.52 billion, still representing the larger share of the group’s revenue; while property investment revenue grew 35% y-o-y to $229 million.

In particular, revenue from the group’s Singapore operations grew 21% y-o-y to $1.47 billion. Singapore generated some 81% of GuocoLand’s revenue during the financial year. All in, GuocoLand posted a group operating profit of $320 million in FY2024, up 13% y-o-y.

Based on GuocoLand’s returns to shareholders and weighted return on equity over three years, the group has emerged as the overall sector winner among real estate listed companies in The Edge Singapore’s Billion Dollar Club Awards 2024.

Despite the uncertain real estate market, GuocoLand’s property development segment performed well in FY2024, says Cheng Hsing Yao, GuocoLand’s group CEO. In March, the group successfully launched Lentor Mansion, its third project in the Lentor Hills estate. To date, Lentor Mansion has sold 92% of its 533 units.

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Meanwhile, GuocoLand sold the last unit at its 200-unit Meyer Mansion in March. Two other residential launches by GuocoLand — Midtown Modern and Lentor Modern — are both 99% sold.

While property development still contributes the lion’s share of the group’s revenue, GuocoLand has actively diversified its earnings through a portfolio of premium investment properties that provide a steady stream of recurring income, says Cheng. “Our premium investment properties in Singapore continued to achieve high occupancy rates and strong leasing demand, resulting in healthy weighted average lease expiry, positive rental reversions and above-market rental rates.”

In particular, GuocoLand’s latest integrated mixed development, Guoco Midtown, has achieved 98% occupancy for its 709,000 sq ft of premium, Grade A office spaces, inclusive of pre-committed leases. Its retail spaces are 100% leased.

The office tenants at Guoco Midtown include Alibaba’s fintech arm Ant Group, Porsche Asia Pacific, Japanese brewing and distilling company Suntory, French advertising agency Publicis, German bank Commerzbank AG, Swiss-based Dutch energy and commodities company Vitol Asia, and Liechtenstein-based private bank VP Bank.

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According to Cheng, GuocoLand’s approach to tenant leasing ensures diversification across industries and business sizes. “We prefer to have a wide range of sectors and many different tenants rather than one super anchor or to focus on a particular sector,” he says. “History has shown that either of those strategies — single tenant or single sector focus — poses concentration risk. It’s very similar to the investment principle of risk diversification.”

Cheng says GuocoLand’s balance sheet remains healthy, with debt-to-assets maintained at 0.43 times. “We continue to manage our capital actively and prudently,” Cheng adds. “Our debt is supported by a strong portfolio of assets worth $12.34 billion as at June 30, with over 70% of the portfolio located in Singapore. At our current leverage, we have headroom to invest in new opportunities as they arise.”

Evolution of the office

The office market has evolved significantly over the years, says Cheng, who was appointed group CEO in July 2021. “Hybrid work arrangements and the anchoring of regional headquarters in Singapore has led to tenants expecting better quality offices and more efficient spaces, as these tenants use the office to attract and retain talent.”

Guoco Midtown boasts the Network Hub, which features private core spaces, shared “swing spaces”, and public external workspaces. According to Cheng, this is aligned with companies’ need for flexibility.

The five-storey commercial component, referred to as a “purpose-built business and social annexe”, links the 30-storey office tower to the retail cluster comprising Midtown Market and Midtown House, the former Beach Road Police Station.

The first floor of the Network Hub features a cafe and members-only lounge. The second floor is designed to host various meetings, incentives, conferences and exhibition (MICE) activities, and the largest meeting venue is a MICE room that can accommodate up to 160 people.

There are also recreational facilities like a 40m swimming pool on the roof, a 100m jogging track and an exclusive private dining room for 18 persons, with space for up to 100 at the poolside. “The public spaces, greenery and amenities at both Guoco Tower and Guoco Midtown developments enhance the quality of the work environment of our tenants, contributing to their talent attraction strategy,” says Cheng.

Sustainable living

On the residential front, company branding and sustainability are now important considerations for buyers, says Cheng, who joined GuocoLand in 2012. “Buyers are seeking thoughtful, well-designed projects that suit their current and future needs. For example, by having more adaptable unit designs, our condominiums can better support working from home. We also incorporate shared workspaces in the community facilities.”

Lentor Mansion, GuocoLand’s third development in the Lentor Hills estate after Lentor Modern and Lentor Hills Residences, is certified Green Mark Platinum (Super Low Energy), or SLE, by the Building and Construction Authority (BCA). Lentor Mansion has also received Maintainability and Whole Life Carbon badges from the BCA, acknowledging the project’s superior sustainable features.

Expected to be completed in the first half of 2028, Lentor Mansion is the group’s first SLE residential project. Among its progressive features are extensive rooftop solar panels, which can offset 60% of the energy consumption required for common areas of the development — double the 30% requirement for the SLE certification.

Lentor Mansion uses sustainable building materials to lower embodied carbon and also incorporates biophilic designs to enhance occupants’ health and well-being. “For both our commercial and residential projects, we incorporate flora biodiversity and public spaces,” says Cheng. “People are generally biophilic, and they also enjoy the sense of being part of a bigger community.”

This extends to the workplace, too. There are three public spaces at Guoco Midtown and public and private gardens that house 350 different species of plants, says Cheng. “This provides office workers and residents the space to decompress and rejuvenate. The public spaces also serve communal activities and raise recognition of our projects.”

Cheng says GuocoLand takes a “triple bottom line” approach to sustainability, balancing economic, social and environmental factors. “We have been at the forefront of green building initiatives, having developed numerous Green Mark Platinum-certified residential and integrated mixed developments.”

Looking ahead, the group’s new development at the Upper Thomson Road (Parcel B) site will be GuocoLand’s second development to attain the BCA Green Mark Platinum (SLE) award with the Maintainability badge.

Since Guoco Tower commenced commercial operations in FY2017, rental revenue has grown from $70 million to $229 million today, representing a compound annual growth rate of 18% over the last eight years. Photo: GuocoLand

Twin engines

GuocoLand’s property development engine has served the group well over the last three decades and continues to generate good development profits, says Cheng. “In the last decade, we have also built strong capabilities and a good reputation for developing high-quality mixed developments with Grade A offices that form our property investment portfolio.”

To build property investment as a second growth engine, the group acquired the Guoco Tower site in Tanjong Pagar in 2010. In 2017, the group expanded into the Beach Road-Bugis district with the acquisition of the Guoco Midtown site. “The rental generated from these integrated mixed developments, as well as 20 Collyer Quay, now provides a steady stream of recurring income,” says Cheng.

Since Guoco Tower commenced commercial operations in FY2017, rental revenue has grown from $70 million to $229 million today, representing a compound annual growth rate of 18% over the last seven years. “Looking ahead, we expect this recurring income to continue growing when Guoco Midtown II comes onstream in FY2025, and [when] Lentor Modern’s retail mall [opens] in FY2026,” Cheng adds.

GuocoLand has doubled the asset value of its investment properties from $3.05 billion in FY2017 to $6.56 billion in FY2024. “The unique value proposition of our buildings has resulted in overall high occupancy rates, positive rental reversions and premium rental rates,” says Cheng.

‘Adjustments’ in overseas markets

Outside of Singapore, Cheng notes that the property markets in China and Malaysia are undergoing “significant adjustments”.

Currently, GuocoLand’s sole commercial property in China is Guoco Changfeng City, a large-scale mixed development in Shanghai comprising two 18-storey Grade A office towers and a basement retail mall. GuocoLand also has two ongoing residential developments in China: Guoco 18T and Guoco Central Park, both located in Chongqing.

“China is the second-largest economy in the world with a strong domestic corporate and manufacturing base, and a vast domestic market that can drive consumption demand,” says Cheng. “Amidst China’s uncertain property market, we are actively monetising our assets in China. Even as we do that, we are watching the market closely for suitable opportunities in the Tier 1 cities we are in, namely Shanghai and Chongqing.”

Cheng’s rationale is that large corporations and professional talent will “continue to gravitate” towards these cities as they provide more developed infrastructure, markets and networks.

Closer to home, GuocoLand’s indirect subsidiary Guocoland (Malaysia) Berhad (GLM) has developed the integrated mixed development Damansara City in Kuala Lumpur, comprising two Grade A office towers, a serviced apartment tower, a luxury hotel and a retail mall.

GLM, which is separately listed in Malaysia, is also developing Emerald 9, an integrated mixed development at Batu 9, Cheras.

“We believe that Malaysia will benefit from the current geopolitical environment, in which supply chains are seeking to set up manufacturing bases there. With this in mind, we are exploring the possibility of repositioning our landbank in Malaysia into industrial townships,” says Cheng.