Hang Lung purchases Wuxi site for 415m yuan
Hang Lung Properties paid 415 million yuan (HK$471 million) for a site in Wuxi, its second acquisition in a week, signalling growing developer optimism in the market.
The accommodation value works out at 3,842 yuan per square metre, about 43 per cent higher than the price the firm paid for an adjacent site in December 2006.
Hang Lung said it would develop a shopping centre and offices on the site at an investment cost of 3.5 billion yuan.
The developer bought the first site in Wuxi for 685 million yuan, or an accommodation value of 2,686 yuan per square metre.
Lee Wee-liat, senior property analyst at Nomura International (Hong Kong), said the purchase sent a strong signal that the market had turned around.
'It is a good move as land values will go up as more developers jump on the bandwagon,' he said, adding that it was also helped by local governments having released more land for sale.
Last Thursday, Hang Lung bought a 63,400 sqmetre site in Dalian for 1.2 billion yuan, its first purchase in two years. It plans to invest an additional 3.3 billion yuan to develop it into a 222,000 sqmetre 'world class' shopping centre.
David Ng, the head of regional property research at Royal Bank of Scotland Group, said acquiring land would help boost developers' share prices. 'We feel many big developers will go for land later in the year.'
Shares of Hang Lung rose 0.91 per cent to HK$22 yesterday.
Hang Lung said the latest site acquisition, south of the Wuxi Hang Lung Plaza, would provide an additional gross floor area of 108,000 sqmetres, raising the total for the whole development to 363,000 sqmetres when completed in 2013.
Executive director Terry Ng Sze-yuen said on Monday that the group had committed 25 billion yuan to develop six shopping complexes on the mainland, more than 60 per cent of its HK$40 billion investment target.
The other five, due to be completed between next year and 2013, are in Shenyang (two), Tianjin, Wuxi and Jinan.
So far, he said Hang Lung had invested 10 billion yuan on the mainland.
Greenland Group, Gemdale Corp and Shanghai Shimao Commercial Group have spent more than 3.6 billion yuan buying land in Shanghai and Qingdao over the past two weeks.
