Hang Lung pays HK$4b for land in Kunming
Hang Lung Properties has acquired two pieces of land in Kunming for commercial development at a cost of about 3.5 billion yuan (HK$4.26 billion).
The two sites, covering a total area of about 56,042 square metres, were acquired by Hang Lung (Kunming), a wholly owned subsidiary of Hang Lung Properties.
The latter company is in turn a non-wholly owned subsidiary of Hang Lung Group.
The sites will provide a total construction area of about 401,382.61 square metres.
Hang Lung said the land is in the heart of Kunming's central business district, with a mass transit railway link planned for the future.
The acquisition would broaden the company's asset and earnings base, and is part of its long-term investment plan on the mainland.
The sale will be funded by Hang Lung Properties' assets and/or financed by bank borrowings.
Ronnie Chan, chairman of Hang Lung Properties, said the firm had been interested in the pieces of land for some time.
'Market conditions in the past two months have deteriorated seriously, but such adverse conditions have done us no harm given our strong balance sheet,' Chan said.
'Instead, we have effectively eliminated prospective competitors.'
Kunming, the capital of Yunnan province, is among the key cities in southwestern China.
With a population of more than 6.4 million people, Kunming is the political, economic, cultural, technological and transport hub of Yunnan.
Last year, Kunming's gross domestic product amounted to 212 billion yuan, with strong economic growth of 14 per cent, and 23 per cent growth in retail sales.
Hang Lung, which first ventured on to the mainland in 1992, has two landmark properties.
They are Plaza 66 and Grand Gateway 66 in Shanghai.
The company has since expanded to Shenyang, Jinan, Wuxi, Dalian and Tianjin.
At the opening of the firm's 171,000 square metre shopping centre in the eastern city of Jinan last month, the company said that it was debt-free and was financially capable of doubling its investments.
The developer said it had about HK$27 billion in cash at the end of June.
The 3.5 billion yuan shopping centre in Jinan is its fourth outside Hong Kong.
In July, Hang Lung said that its underlying profit from sales and leasing in Hong Kong and the mainland plunged 59 per cent to HK$2.74 billion, from HK$6.67 billion the previous year because it had no new residential projects to offer in the year to June.