• Sun
  • Aug 31, 2014
  • Updated: 6:22pm

Unit of NWD hit by limit on gains

PUBLISHED : Friday, 18 June, 1999, 12:00am
UPDATED : Friday, 18 June, 1999, 12:00am

Five mainland projects of New World China Land, a unit of New World Development (NWD), could be affected by Beijing's decision to cap investment returns on property projects at 3 per cent.


The unit, which plans to seek a Hong Kong listing next month, also unveiled details of its borrowings in a preliminary prospectus.


New World China Land had outstanding borrowings of $18.34 billion, attributable mainly to an unsecured loan from NWD of $15.91 billion, but also including bank loans of $1.02 billion and other loans of about $1.4 billion.


Beijing imposed a cap on property development margins last year.


The ruling stated developers of projects, which had not been started by July 3, last year, could not sell units for a return of more than 3 per cent of development costs.


This compared with a 15 per cent guaranteed margin above costs enjoyed by New World China Land's existing low-cost projects.


In the listing document, the company said the new measures could apply to five of its developments, including projects in Guangzhou, Haikou and Wuhan.


As of March, total investment in these five projects was $524 million.


The company said it was unclear how the directive would be enforced.


New World China said it might convert portions of the five projects into a conventional property development by paying a land premium and granting land use rights.


According to the prospectus, the flotation comprises a placing and a new issue.


The new issue will represent about 10 per cent of the total number of shares available.


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