PROPERTY DEVELOPERS
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China Property

New World China Land sells three projects in China to Evergrande for HK$16.36 billion

PUBLISHED : Wednesday, 02 December, 2015, 10:15pm
UPDATED : Thursday, 03 December, 2015, 11:16am

New World China Land (NWCL) has agreed to sell three property projects in China’s second and third-tier cities to Evergrande Real Estate for HK$16.36 billion.

The sale will allow NWCL to reap a net gain of HK$6.57 billion, the NWCL said in a filing to the Hong Kong stock exchange on Wednesday.

“The disposals signifies the group’s strategy of optimising its project development and investment portfolio by scaling down investment in second and third-tier cities and projects with lower gross profit margin and by focusing more resources in 1st-tier and 1.5-tier cities and mid-sized property projects, “ said New World China Land managing director Henry Cheng Kar-shun in a statement.

It is the second acquisition by Evergrande Real Estate Group within three weeks after it agreed to buy Mass Mutual Tower, a prime office block at the corner of Gloucester and Jaffe roads in Wan Chai, from Chinese Estates Holdings for HK$12.5 billion.

NWCL entered into an agreement with Evergrande to sell its property projects in Wuhan, Hubei province, Huiyang, Guangdong, and Haikou, Hainan Island.

The company agreed to dispose a 60 per cent stake in Wuhan New World, a co-operative joint venture firm incorporated in China, for HK$4.6 billion.

The principal business of Wuhan New World is the development of a massive low-cost housing, Wuhan Changqing Garden, Wuhan Changqing Nanyuan and Wuhan Xinhua Garden in Hankou, Wuhan. The development will comprise of 753,273 square metres for residential development and 418,419 sq metres for commercial, retail and ancillary facilities.

The estimated net gain from the disposal would be HK$2.9 billion, according to the company announcement.

In Huiyang, NWCL agreed to sell the entire interest in Dragon Fortune Group which engaged in the operation of the Palm Island project comprising of a golf club and real estate development with a site area of about 992,000 square metres and 378,000 sq metres respectively.

The remaining developable floor area of the real estate project amounted to 415,914 sq metres.

NWCL said it would fetch an estimated net gain of HK$77 million from the sale.

In Haikou, NWCL agreed to sell a residential project of villa, low and high-rise residence and a service apartment for HK$10.42 billion. The luxury residential development will yield a total gross floor area of over two million square metres in the costal area in north western Haidian Island.

Phase two of the Haikou project with gross floor area of about 90,000 sq metres is under construction and is expected to be completed in 2017.

The estimated net gain arising from the sale of Haikou project will be HK$3.6 billion, it said.

“The disposal enabled the group to unlock the value in their investment in the property projects and to realise cash resources in improving the liquidity and strengthening the financial position of the NWC group,” it said.