Cofco unit wins Beijing sites for 2.59b yuan

PUBLISHED : Wednesday, 21 May, 2008, 12:00am
UPDATED : Wednesday, 21 May, 2008, 12:00am

Cofco Property Group, the property arm of Cofco Group, yesterday won the bid for three residential and commercial sites in Beijing for 2.59 billion yuan (HK$2.9 billion), trumping well-known rivals including Guangzhou R&F Properties, Vantone Group and Gemdale Group.

The sites are in the southwest Shunyi district of the capital. 'Many developers were interested in the sites as the district has the potential to develop into a residential area for the middle class,' said Li Wenjie, general manager at Centaline (China). 'The demand for housing in the area will be strong.'

With an area of 290,361 square metres, the suburban sites can provide a total gross floor area of 520,822 sq metres.

A large commercial and residential project with a total gross floor area of 323,776 sq metres can be developed on two of the sites. The purchase price translates into 4,060 yuan per square metre.

The third site can accommodate a housing estate with a gross floor area of 197,046 sq metres. After an exchange of 111 bids with other developers, the site went to Cofco Property for 6,496 yuan per square metre - 250 per cent higher than the opening bid of 365.76 million yuan. Mr Li said the purchase prices were reasonable, given that the average price of new homes in Shunyi district was 8,500 yuan per square metre.

'If they pre-sell the projects next year, the asking price could reach about 9,000 yuan per square metre.'

Despite housing sales in Beijing dropping significantly in the first quarter, Mr Li said property prices had remained stable. 'The cut in prices happened in the primary market only, where developers lowered the asking prices of their projects to lure buyers.'

He expects Beijing's property prices to continue to rise in the next few years, given the strong economic growth. Shares of Cofco Property dropped 8.39 per cent to end at 16.82 yuan yesterday.