Page 9 - SAR141018_Forterra AR 2013

FORTERRA
ANNUAL REPORT 2013 7
CPI inflation stayed low throughout
2013 and finished the year at
2.6% year-on-year, undershooting
the government’s 3.5% annual
target by a notable margin,
with December CPI dropping
to a seven-month low of 2.5%,
alleviating the fear of aggressive
monetary tightening. Overal l
inflation pressure is expected to
remain modest in 2014, which
provides more leeway for policy
makers to manage monetary
policy, especially when growth
slows more than expected.
The property sector was the bright
spot in China’s economy during
the year after a lackluster 2012.
Housing prices and sales in major
cities rose quickly as homebuyers
returned to market, which drove
total property sales throughout
the country expanded by 26.3%
to RMB8.14 trillion in 2013, up
from 10.0% growth in 2012.
Capital investment in property
development rose 19.8% in 2013
compared with 16.2% increase
in 2012. Increasing liquidity for
the real estate sector in the year
helped fuel the market boom as
banks delivered some RMB2.34
trillion new loans to the sector,
almost RMB1.00 trillion more than
2012.
The office property market in
Shanghai remained stable during
2013. Average rents edged up
to RMB9.2/sqm/day by end of
2013 from RMB9.0/sqm/day
(December 2012) mainly driven
by strong leasing demand from
domestic financial institutions,
whilst the vacancy rate jumped to
10.0% from 7.8%. Retail real estate
market continued to be buoyant
though facing more challenges
than ever. Average ground floor
rents in prime locations increased
to RMB50.5/sqm/day from
RMB47.6/sqm/day with vacancy
almost staying flat at 4.6%.
OUTLOOK
2013 marked a new era for
the Trust with Nan Fung’s
acquisition of the Trustee-
Manager and Property Manager
and also becoming the single
largest unitholder of the Trust.
Nonetheless, 2014 will continue
to present challenges, with the
completion and opening of The
Place being the critical milestone
for the Trust. The management,
under the leadership of the newly
appointed CEO, Mr. Andrew SEAH
Choo, is committed to spend every
effort and resource to focus on the
development and leasing work of
The Place and bring it to reality.
Nan Fung will also utilise its real
estate development capability and
experience to provide assistance
and add value to the Trust.
Looking forward, wi th the
completion of The Place, the
majority of the Trust portfolio
(81.7% of the portfol io) wi l l
become income-generating with
recurrent rental income. This will
lead to significant improvements
in the cashflow and financial
position of the Trust, and lay a
strong foundation for its future
development.
Eric Chung Chun Kwong
Chairman of the Board
18 March 2014
Annual CPI inflation
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
20002001200220032004200520062007200820092010201120122013
(Source: CEIC, National Bureau of Statistics)