Kaisa resets sights on projects in top-tier cities

PUBLISHED : Friday, 22 February, 2013, 12:00am
UPDATED : Friday, 22 February, 2013, 5:02am

Shenzhen property developer Kaisa Group will refocus on first- and second-tier cities, where urban redevelopment projects are in greater demand.

Kaisa, which is 17th in terms of flat sales on the mainland, is also in talks with the Shenzhen government for three projects in Qianhai, an area Beijing has designated as a Shenzhen-Hong Kong modern service industry co-operation zone.

Kaisa's net profit rose 9 per cent year on year to 2.07 billion yuan (HK$2.55 billion) for the year ended December on 11.9 billion yuan of revenue, the company said yesterday. No dividend was declared. The average selling price of flats sold fell 4 per cent year on year to 6,730 per square metre from 7,022 yuan per square metre, as more flats were bought in third-tier cities, including Nanchong in Sichuan, Taicang in Jiangsu and Foshan in Guangdong.

But Kaisa plans a comeback in first-tier cities this year.

"Urban redevelopment projects are the top priority in our development plan now," Kaisa chairman Kwok Ying-shing said. These projects in prime downtown locations could be sold at higher prices, Kwok added.

The company will complete some redevelopment projects in Shenzhen this year.

It has acquired various redevelopment projects in Shenzhen, Zhuhai, Dongguan and Guangzhou, with total gross floor area of 10 million square metres.

In response to the five new measures rolled out by the State Council yesterday in yet another attempt to curb the mainland's runaway flat prices, Kaisa's management said they were used to the austerity measures and believed mid-sized flats were still desirable among flat buyers.

The firm wants first- and second-tier cities to contribute 70 per cent of flat sales this year, up from half last year.

Kwok said the Qianhai project had great potential but there would be fierce competition for projects.

The company has teamed up with mainland financial institutions to bid for office, serviced apartment and residential projects. The projects are still pending government approval.

Kaisa projected that its contracted flat sales would rise to 22 billion yuan this year from 17.3 billion yuan in 2013, with 40 billion yuan of contracted flats up for sale this year.