Projects in Dalian escape credit crunch
THE latest credit crunch in China has had little impact on the 238 investment projects signed in Hong Kong with foreign investors in March, according to Dalian officials.
And negotiations are said to be progressing smoothly with tycoon Li Ka-shing to develop two to four deep-water container berths at Daiyao Bay in the northeast Chinese port city.
Approval had been granted for New World Development to build the Huawei Daxia (Apartment) in Dalian, said Vice-Mayor Wang Shijia.
A formal contract would be signed next month for the building of a Shangri-La Hotel in Dalian by Malaysian hotel magnate Kuok Hock Nien.
Three property deals with Allied Properties (HK) were also making headway, Ms Wang said.
''Because the majority of our real estate projects are financed by foreign developers, the property market in Dalian has not been seriously affected by the tightening of credit in China,'' she said.
''There are individual cases but the impact is not strong in Dalian relative to other cities such as Haikou and Shenzhen.
''And there are foreign investors who have volunteered to raise their stakes in joint ventures so that the mainland partners can make it through the current financial crisis.'' But city officials admitted that individual foreign investors had requested extensions of the grace periods permitted in their initial contracts so that they could meet the financial requirement and carry on with their investment in Dalian.
Under mainland law, the Chinese side can declare the initial contracts null and void if the foreign developers fail to pay within the grace period at least 20 per cent of the total development cost as land-use fees to the Government.
For example, a multi-billion dollar project involving a Hong Kong developer to build a residential building is hanging in the balance because the developer is having difficulties in meeting the financial requirements, according to Hong Yuandong, directorof the Dalian Commission of Foreign Economic Relations and Trade.
''The developer has informed us that he should be able to raise the necessary cash, so it is still possible that this project will continue as planned,'' Mr Hong said.
''But we will have to take extra precautions in the future in our real estate development because we do have a fund shortage problem at home.
''If he can't meet our financial requirement, then we will have to look for another partner.'' Three other hotel projects, including one involving businessman Tsui Tsin-tong, at the Dalian Development Zone had also failed to proceed according to schedule, said Tian Changming, vice-chairman of the administrative committee of the Dalian DevelopmentZone.