While circuit breaker scenes – nary a vehicle in the Central Business District, and once-glitzy shopping belts deserted and lifeless – might appear to be straight out of an apocalyptic movie, it isn’t the end of the world. Tony Lombardo, CEO of Lendlease Asia, is confident the office and retail real estate sectors will bounce back.

He cites the examples of Chinese cities that have progressively returned to normal since April. “All of our construction sites in China are back at 100 per cent and our large developments are back to 95 per cent capacity. While we don’t own malls in China, we have talked to businesses and they say their malls have about 80 to 85 per cent traffic. Office activity is also back to normal – there doesn’t seem to be a material shift. It takes a while for people to have the confidence to come out again, but China is a good example of how things can return to normal.”

Tony Lombardo
Tony Lombardo


Outside of China, Lombardo shares that Malaysian malls which reopened early last month saw a return of 60 to 70 per cent in foot traffic within the first weeks. Lendlease’s largest integrated development in Asia, The Exchange TRX in Kuala Lumpur – projected for completion in 2025 – has also garnered a healthy lease rate of over 50 per cent of its retail space.

But how the rest of the world will recover remains to be seen. Of course, some rethinking is in order – even for a giant like Lendlease, which has grown from an Australian construction company to an international property and infrastructure group in 62 years. As at Dec 31 last year, Lendlease Asia’s total assets under management stand at A$8.8 billion (S$8.1 billion), with A$9.3 billion in funds under management.

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The company has four retail assets in Asia, with over 640 retail tenancies held across Parkway Parade, 313@Somerset and Jem in Singapore. It developed, constructed and manages Paya Lebar Quarter (PLQ), comprising three Grade A office towers, a condominium complex and PLQ Mall, which opened last year. PLQ covers close to a million sq ft of prime space for some 10,000 working executives, and 340,000 sq ft of retail space offering a myriad of shopping, dining and entertainment experiences for shoppers.

“We are seeing from statistics that we are going into recession and that would impact demand. The way we use the office might shift – some companies might move to agile working, getting staff to come in only when they need to. How office spaces are designed will also need to be changed but, by the looks of it, we will still need them,” says Lombardo.

Retail – which has been grappling with the effects of e-commerce – will also be going through a significant shift. He shares that the company has already been implementing strategies such as attracting online businesses to open in malls. “We will see some shifts around how we will work and shop, and we are likely to relook malls – not just as shopping venues but also as community spaces, with lots of open areas for people to enjoy.

PLQ Mall
Paya Lebar Quarter, which opened last year, comprises three Grade A office towers, a condominium complex and PLQ Mall.

“The Covid-19 situation has created a lot of uncertainty. The next three to six months will be crucial. In the short term, we will keep our business operations tight, and make sure we have the liquidity to maintain a strong balance sheet.

“But we will also need to survey customers before we can understand the changes that people want in real estate. That said, our long-term growth strategy doesn’t shift because we will continue to see more cities getting urbanised,” he says.

As a company with roots in construction, Lendlease has been active in supporting governments with urbanisation plans. Lombardo adds that past financial crises have thrown up opportunities for the company in terms of securing mixed-use sites under urban renewal schemes put up by governments, which seek to drive the economy through releasing land and creating jobs.

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Acknowledging that the Covid-19 crisis is a different animal, he says, “In my working career, this is the first time I have experienced anything of this magnitude.”

He was chief financial officer of Lendlease Group before taking up his current role in 2016. “While the immediate challenges of the pandemic – from ensuring staff safety to making sure the business can survive the interruption and disruption – might keep me up at night, I am also excited about how we will be looking at real estate differently.

“Disruptions create innovation. The digital side of our business will see accelerated development, and we have been making a lot of headway since William Ruh, the former CEO of GE Digital and chief digital officer of General Electric, joined as Lendlease’s CEO for Digital in 2018. We have been investing heavily in ways to disrupt our own business, which should throw up some exciting opportunities.”


Among Lendlease Asia’s four retail assets in Asia is 313@ Somerset. Slated to open in 2025 is its largest integrated development in Asia, The Exchange TRX in Kuala Lumpur (previous page).


Industry observers weigh in on the outlook of Singapore’s different real estate sectors following Covid-19

Retail sector: Paradigm shift

“Retail sales for the past 12 months have been in the red, and every retailer and landlord is grappling with e-commerce and possibly consumerism fatigue. Covid-19 is the gastric flu that will force the industry to purge any mall that doesn’t cut it,” opines Desmond Sim, head of research for South-east Asia at CBRE Singapore.

Alan Cheong, executive director for Research and Consultancy at Savills Singapore, posits that this is an opportune time to restructure on many fronts. “Presently, the majority of landlords collect a high base rent and a Gross Turnover (GTO) rent, whichever is higher. The restructuring would entail more emphasis on GTO terms – so that the landlord has more skin in the game… Our retail space isn’t oversupplied yet, but landlords need to work hand-in-hand with retailers. The horse is dead, better start walking!” he cautions.

Sim highlights other means of collaboration: “Landlords and retailers have to work together to exploit omni-channelling technology. At present, mall apps are at best a glorified directory. But what if users get a discount on a product they purchase through the app, but collect from the shop? This…also allows the landlords to track sales. Such technology exists yet is not widely implemented. The pandemic will push the industry to think strategically – and act on it.”

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