Developer to double land bank purchases

China Overseas on the acquisition trail despite Beijing's austerity measures

China Overseas Land & Investment, a major property developer on the mainland, said it planned to almost double land acquisitions this year, despite the central government's measure to clamp down on developers who hoard land and housing supplies.

China Overseas said it targeted to acquire some three million square metres of land in gross floor area this year, compared with 1.74 million square metres it bought last year. The company has snapped up about one million square metres of plots in China so far this year for more than one billion yuan.

The new purchases boosted its land reserve to a gross floor area of 12 million square metres in 12 cities, which the management said would be sufficient for the next five years. Its land bank stood at 10.75 million square metres at the end of last year.

'Adequate land reserve is a prerequisite of sustainable growth for real estate developers,' China Overseas' chairman and chief executive Kong Qingping said after the company's annual general meeting yesterday.

'We will continue to replenish our land bank this year as we expand further in the market.'

In another move to cool the mainland's red-hot property market, the State Council last week announced six measures, including credit-tightening and tax regulations, to calm down soaring property prices and speculation.

Analysts said the measures, which aim to crack down on developers who hoard land and withhold flat sales until prices become favourable, would particularly hit those with large projects in cities where prices were rising fast.

Nearly half of China Overseas' land reserve at the end of last year was located in primary cities - 25 per cent in Guangzhou, 14 per cent in Beijing and 10 per cent in Shenzhen. Property prices in the three cities rallied 14 per cent, 17.3 per cent and 26 per cent in the first quarter respectively.

Mr Kong did not expect the fresh round of austerity measures to hit China Overseas, and hoped sales would grow this year by 20 per cent year on year. Sales jumped 31 per cent to 1.13 million last year.

Mr Kong said the firm's property sales in the first four months of this year had met targets but declined to disclose further details.

Meanwhile, Mr Kong said the firm's plan to spin off its infrastructure assets was still on, although it had yet to fix a timetable. China Overseas, which spun off construction for a separate unit last year, hopes to focus on real estate through another spin-off.

Its infrastructure assets include power plants, toll roads, and bridges, which reported a profit of about $120 million on sales of $500 million last year.

Shares of the firm closed down 1.12 per cent at $4.4 yesterday.