China Overseas Land & Investment, a subsidiary of China State Construction Engineering, will spend the money to build a park within the grounds of the Daminggong Palace ruins in the city's northern suburbs. The palace was built more than 1,300 years ago during the Tang Dynasty.

The residential and commercial project will redevelop the areas next to the palace.

China Overseas had signed a framework agreement on the development with the Xian government, said chairman Kong Qingping, who was attending the Xian City Trade Fair yesterday.

Covering an area of 29 square kilometres, the project will be developed in five phases, Mr Kong said. An agreement on the US$500 million initial phase had been signed, and construction was due to start late this year or early next year.

Shares of China Overseas Land have gained more than 33 per cent this year as investors showed approval for its aggressive expansion in the mainland's middle and high-end residential markets.

The palace development project will be one of the company's biggest. China Overseas has investments in 15 mainland cities.

Long-term preservation and protection of the palace ruins will be the objective of the project, said the Xian government. An ancient capital dating back to the Qing Dynasty, Xian is a leading tourism centre.

The planned park will showcase the culture and characteristics of the royal gardens as they were more than 1,300 years ago.

At the same trade fair, Henderson Land Development executive director John Yip Ying-chee said the company had invested in two residential projects in Xian, involving an investment of 3.3 billion yuan.

Disclosing details for the first time, Mr Yip said one was a housing development in Xian with a gross floor area of 16.5 million square feet.

At a budgeted project cost of five billion yuan, it will offer about 30,000 residential units on completion.

Surbana, a unit of Singapore's Temasek, is Henderson Land's equal partner in this venture.

The second project, which Henderson Land will develop solely, will yield about 1,200 units at an estimated cost of 1.3 billion yuan.

Last month, Mr Yip had said that Henderson Land had plans to buy more than 10 sites in eight mainland cities in the second half at an estimated cost of more than seven billion yuan.