China SCE Property to focus on acquisition opportunities to fuel expansion
Since its Hong Kong listing in 2010, China SCE Property has become one of the biggest developers in southern China’s Fujian province, expanding its footprint to the country’s top cities including Beijing, Shanghai and Shenzhen.
Executive Director and Vice President Huang Youquan said the company has kept a cautious, but stable growth outlook, a strategy garnered from a partnership between its parent company and Japanese enterprises over the years.
China SCE Property has been eyeing acquisition of projects in the secondary market to support expansion, amid stiff competition for land sites.
What is the company’s strategy to obtain land this year?
Project acquisition will be our focus. So far this year, we have already bought two projects, one in Hangzhou and the other in Shanghai. We also increased our stake to 100 per cent in a project in Fujian province. Land can be very cheap in the secondary market (compared to public land auction). The plot we bought in Hangzhou’s Xiaoshan this February cost only 2,000 yuan (HK$2,360) per square meter, the average transaction prices in the area were 9,000 per square meter at the time, and that has continued to appreciate in recent months.
Are there many opportunities to find affordable land?
Yes, but what’s more important is our skill to redevelop these projects. To be honest, secondary projects usually have a lot of problems and that’s why others want to sell them. Taking such projects challenge a developer’s overall operating capabilities and whether it can establish an appropriate plan to digest the project. Most common problems include product positioning, housing type design, taxes and so on. It is not easy to make sure a redevelopment is legal and within a reasonable budget. The Shanghai project we purchased in April had approached many potential buyers, but the original developer decided to sell to us in the end and to exit from the market. The average cost was only 8,000 yuan per square metre.