China Vanke follows rich Chinese to grow abroad

PUBLISHED : Thursday, 18 April, 2013, 12:00am
UPDATED : Thursday, 18 April, 2013, 5:33am

Analysts are expecting more overseas expansion from China Vanke as the mainland's biggest developer prepares to branch out into Singapore, after tapping into the Hong Kong and San Francisco markets this year.

"They will follow the footprint of rich Chinese while mapping out their overseas expansion plan," said Alan Jin, an analyst at Mizuho Securities Asia. "San Francisco, Hong Kong and Singapore are the most desirable overseas destinations for Chinese immigrants."

China Vanke, through a wholly owned subsidiary, is acquiring 30 per cent of Keppel Land subsidiary Sherwood Development in Singapore for S$135.5 million (HK$850.2 million), Keppel Land announced on Tuesday.

China Vanke president Yu Liang said the company hoped to use that long-term partnership to learn best practices from Keppel and would look for investment opportunities in the city state.

The first joint-venture project will be a condominium development in Singapore's Tanah Merah area. Keppel, through Sherwood Development, was awarded the prime residential site for US$434.55 million last October.

The project, comprising 726 residential units, may be launched in the second half of this year.

China Vanke made its first foray into Hong Kong's property market in January, acquiring a residential site on the Tsuen Wan waterfront in partnership with New World Development for HK$3.43 billion. Vanke Property (Hong Kong), a subsidiary of China Vanke, has a 20 per cent stake in the consortium, and the rest is owned by New World.

A month later, China Vanke bought 70 per cent of an upmarket residential project at 201 Folsom Street, in San Francisco, from Tishman Speyer Properties.

'They will go anywhere the mainland Chinese want to go," said Lee Wee Liat, head of property research at BNP Paribas Securities (Asia).

"But at the end of the day, China Vanke will settle down in two large markets - the US and Canada," said Lee, adding that markets such as Hong Kong are too small for the property giant.

Analysts, however, said overseas expansion would not affect the company's mainland focus.

"The overseas businesses interest is still very small compared with … the mainland," said Jin.

Founded in 1984, Vanke is China's largest residential developer. Its sales topped 140 billion yuan (HK$174 billion) last year.