Property attracts China investors

PUBLISHED : Monday, 22 August, 1994, 12:00am
UPDATED : Monday, 22 August, 1994, 12:00am

THE fast growing real estate market in China, with cheap land and surging demand for homes and commercial space, is not only attracting Hong Kong companies but also spurring mainland entrepreneurs to invest in the market.

The Velox Group, a firm indirectly owned by China United Electric Import and Export Corp (CUEC), a science and technology trading vehicle of the Ministry of Machinery Industry, is a China-backed, Hong Kong-registered company which has been attracted by the market.

The company is developing two properties in China - one in Harbin and the other in Beijing - involving total investment of 1.4 billion yuan (about HK$1.26 billion).

Unlike other property developers rushing to step up operations in the major cities, Velox took the challenge to invest in the fledgling real estate market of Harbin, capital of Heilongjiang province.

The project, with a total gross floor area of 82,000 sq metres, will comprise two office towers and a four-storey podium and should be completed by 1997. It will cost 700 million yuan.

''Investing in Harbin is a very challenging move for the company, which is just getting into China's property market,'' said Pei Yifei, managing director of Velox's subsidiary Harbin Velox Real Estate Development.

Mr Pei is also the son of Pei Zhipeng, head of CUEC.

He said the real estate market in Harbin was not as well developed as that in other cities in China.

But the 36-year-old entrepreneur was confident of the potential for the market because even though it was in its infancy, it would provide many opportunities for investment.

Mr Pei said he was optimistic about Harbin's prospects because it was the base for economic and trade co-operation with the Commonwealth of Independent States and east European countries.

Demand for office space in the city was expected to rise in view of the increasing number of companies which were setting up bases catered to those countries, he said.

The project, which is 90 per cent owned by Velox and 10 per cent by the Harbin government's real estate market management department, was one of the few top grade office developments in the city which had received the Harbin government's approval for investment by foreigners.

The sale of the building should start at the end of this year. ''The selling price for the property will be a bit higher than the market price of US$1,000 a square metre because of the high quality of the project,'' said Mr Pei.

''Our ambition to invest in China's real estate market might suffer a setback if the Harbin project is unsuccessful.'' Beijing was predicted to be a market with one of the highest growth prospects in China. The firm's office property development there is 17 storeys, an equal joint venture with Beijing Architectural Design and Research Institute.