BEIJING North Star Co, a real-estate arm of the municipal government, said its venture with another developer agreed to buy a building site in Changsha, China, for 9.2 billion yuan (US$1.2 billion).
The acquisition is the first step to expand the development business outside China's capital, Beijing North Star said on Wednesday in a statement to Hong Kong's stock exchange.
Its shares surged as much 12 percent to HK$6.91 (88 US cents), and traded at a record HK$6.39, up 3.9 percent, at 12:30pm in Hong Kong on Wednesday. That values the company at HK$43.5 billion, Bloomberg News reported.
Beijing North Star's purchase comes as larger Chinese developers expand land reserves because government measures to cool a real-estate bubble threaten to force smaller developers out of business, reducing competition.
Beijing had the third-highest gain among Chinese cities for home prices last month and Changsha the seventh-highest, the National Development and Reform Commission, China's top planning body, said this week.