Cashed-up Yuexiu Property eyes Haizhu waterfront site in Guangzhou

PUBLISHED : Monday, 27 August, 2012, 12:00am
UPDATED : Monday, 27 August, 2012, 5:05am

Yuexiu Property, the property arm of the Guangzhou municipal government, plans to buy a 7 billion yuan (HK$8.54 billion) residential site in the city this year to replenish its land bank.

Alan Ha, director of investor relations of Yuexiu's capital department, said: "We have been interested in the site for a long time. We will join the bidding if the government releases it for sale later this year."

The site on Haizhu district's waterfront covers 500,000 square metres. It could yield a total gross floor area of 1 million to 1.5 million square metres, depending on municipal government town planning.

Ha estimated the site worth at least 7 billion yuan (HK$8.57 billion) or 7,000 yuan per square metre.

"It's worth between 7,000 and 8,000 yuan. Average property prices in the area without a river view are about 25,000 yuan per square metre," he added. "Property prices on the site could reach nearly 30,000 yuan per square metre with the better views."

The developer has spent 406 million yuan so far this year buying three residential sites in Guangzhou, Hangzhou and Hong Kong, with a total gross floor area of 218,300 square metres.

With the disposal of the Guangzhou International Finance Centre to its property trust, Yuexiu REIT, and strong property sales in the first half, the firm's net gearing ratio is expected to drop from the 71.3 per cent at the end of June to 33.5 per cent next month. This move will help the developer with land acquisition.

Yuexiu generated 8.5 billion yuan from contracted sales from January to June, achieving 85 per cent of its sales target of 10 billion yuan for this year.

Given that 950,000 square metres would be up for sale in the second half, Ha said the revenue from contracted sales might be more than 12 billion yuan.

Shares in the company dropped 1.6 per cent to HK$1.83 on Friday.