HONGKONG property giant New World Development plans to launch a series of multi-million dollar housing schemes, similar to the Hongkong Home Ownership scheme, in Wuhan, Beijing and Dalian. The firm will build a total of 218,000 flats for the schemes in Beijing and Wuhan. The company will build residential complexes for the local authorities, who will provide the land and underwrite the sale of the project. New World is being guaranteed a 15 per cent profit, after tax, on the sale of all residential units. The Beijing and Wuhan projects will involve the development of a total of 4.76 million square metres and an initial capital outlay of $500 million. New World guarantees that all those people removed from development sites will have priority to buy flats under the scheme. Mr Henry Cheng Kar-shun, New World managing director, would not reveal details of the project. Sources in China said a formal contract with the Wuhan authorities was expected to be signed in June, while another contract for the Beijing site would be sealed later this year. The Dalian project has yet to be finalised. The Wuhan sites, located at Donghu, Xihu, Tazi, and Zhanggongdi respectively, will involve the development of a 2.67 million sq m, of which 100,000 sq m with a gross area of 360,000 sq m will be launched by the end of the year. The bulk of the development will be at Zhanggongdi Road where 2.5 million sq m will be developed; the other two sites are close to Hankou train station. ''If it's proved to be successful, we'll ask New World to expand the plan as soon as possible. We're desperate to redevelop the old district in the city,'' said a senior official of the city. The Beijing plan involves the development of a two-million sq m site located next to Chongwen district - the largest Beijing-Hongkong property project. New World first moved into China in 1980, when it opened the China Hotel in Guangzhou. Since then, the developer has done very little in China. Until the Tiananmen massacre in June 1989, when everyone put a temporary halt to further investment in China, New World began making concerted moves into the mainland. At present, it has a land bank of 15 million sq m for the coming 10 years of development, although little has been used. Of that, 10 million sq m has been set aside for commercial/residential projects and five million sq m for the Home Ownership Scheme. New World has been regarded as one of the most aggressive foreign companies to invest in China. The company plans to invest up to 25 per cent of its assets in China. ''I won't change this portfolio in the coming one or two years. I can't say if I will increase this ratio to more than 50 per cent or not; it all depends on China's economic growth,'' said Mr Cheng. New World concentrates almost all of its projects in six cities - Shanghai, Guangzhou, Wuhan, Tianjin, Beijing and Dalian. Half of the projects are long-term ventures, including infrastructural and energy projects, and half are short-term ones, mainly residential development. ''The short-term projects can offer us quick returns, while the long-term ones will have a stable return in the future,'' said Mr Cheng. Although the total investment involved is as much as $40 billion, Mr Cheng repeatedly stressed: ''New World has no need to raise immediate rights issues.'' He said the company only needed to inject $4 billion cash into the projects, while the remainder could be financed by the returns from some short-term projects. New World has poured $2 billion into China development. ''Another $2 billion will be paid over the next two or three years and I believe New World should be able to handle it,'' Mr Cheng said. About 60 per cent of the infrastructural projects are funded by bank loans, while all of the residential development are self-financed. Establishing good connections with the local government appears to be New World's answer to successful deals. ''This attitude enhances our information networks and helps us to spot star investments quickly,'' said Mr So Ngok, director and assistant general manager of New World Development (China).
