November 21, Foreign investors are seeking opportunities in China’s real estate market, despite the central government’s tough property curbs that are putting off local developers.
Investments made by developers from Hong Kong-based Cheung Kong Holdings Ltd. (0001.HK) to Singapore’s CapitaLand Ltd. in the mainland indicate firm investor confidence in the Chinese real estate market, with Cheung Kong saying the current liquidity crunch in China is a “golden time” for the company to expand its presence.
“We have many projects in China that are generating a lot of cash, so we are actively looking for acquisition opportunities,” Cheung Kong executive director Chiu Kwok-Hung told Bloomberg.
China’s property curbs would stay for the next 12 months until the change in the government, Chiu said at the MIPIM Asia Real Estate Conference in Hong Kong on Nov. 17.
Premier Wen Jiabao is due to retire from his post in the Communist Party in late 2012 and step down as premier in early 2013. He has reiterated several times this year that he remains determined to bring soaring home prices to a reasonable level during his tenure.
Attractive Market
CapitaLand, Singapore’s largest real estate developer with some $7.8 billion of assets in China, said it would keep looking for promising investment opportunities on the mainland in good or bad times.
Since entering China in 1994, CapitaLand has established a comprehensive portfolio covering residential property, commercial property, real estate finance and other areas. The developer said it aims to double its portfolio in China over the next 5 years by continuing to seek opportunities as the government’s curbs make the nation an “attractive” investment destination.
Hutchison Whampoa Ltd. (0013.HK), which like Cheung Kong is controlled by Hong Kong’s richest man Li Ka-shing, has also set its sights on the mainland market.
Earlier this month the developer acquired a plot of land in Foshan covering a total area of 74,858 square meters for RMB 800 million ($126 million). The plot will include both residential and commercial property developments.
The plot was put up for auction with a base price of RMB 896 million in June, but the auction was cancelled due to a lack of bidders.
Hutchison Whampoa plans to start construction on the plot in May 2012, and properties are expected to be launched by the second half of 2013.
Active Buying
Unlike its mainland peers, the Hong Kong-based developer has been active in land buying. Many local companies have been taking a cautious approach due to cash flow pressures, declining sales and falling prices.
Thirty-two plots of land worth some RMB 17.8 billion were suspended from being auctioned in Guangzhou so far this month as the land market outlook remains gloomy.
Property news portal guandian.cn reported that Hutchison Whampoa was also the only bidder and final buyer of a RMB 1.9 billion plot in Dalian through its local subsidiary Fangbaoli Development Co. Ltd. in August. No confirmation has been made by Hutchison Whampoa so far.
In June, Hutchison Whampoa, via its Changchun-based branch, bought a plot of land for RMB 464 million.
The company said in its first-half earnings report that it had 48 projects in 23 cities with a combined area of 9.8 million square meters available for development as of June 30. Over 97% of them are located in mainland cities.
U.S. billionaire investor George Soros is planning a property fund to invest in high-quality real estate in China through the Hong Kong branch of Soros Fund Management, the 21st Century Business Herald revealed last week, citing sources with knowledge of the matter as saying.
“Compared to Hong Kong, home prices in mainland cities are relatively low and there’s still room for further increases; besides, the accelerating urbanization will also add more value to land plots. I think most Hong Kong developers are looking at the 2 elements when boosting their investments,” Guangzhou-based real estate expert Xie Yifeng said.
“In addition, I find a major difference between mainland developers and their Hong Kong counterparts: the former focus more on quick sales and cash withdrawal, while the latter put stronger emphasis on creating better residential property facilities and convenience,” Xie told the National Business Daily.
Source:21cbh.com