No end in sight to developers' China land-buying spree

PUBLISHED : Friday, 29 July, 2005, 12:00am
UPDATED : Friday, 29 July, 2005, 12:00am

Hong Kong's property big guns are continuing their buying assault on second-tier mainland cities.

Spurred by Li Ka-shing's $6.4 billion worth of mainland acquisitions earlier this year through development flagships Hutchison Whampoa and Cheung Kong (Holdings), prominent Hong Kong-based developers are keen to keep up with their competitors.

New World China Land, the mainland property arm of New World Development, is planning to invest up to five billion yuan in a commercial and residential project in Dalian's waterfront area, according to William Leung Wai-kai, assistant to the managing director of New World Development.

The project was a redevelopment of the eastern part of Dalian's old port area, which was freed up as a new port was developed. According to the city's vice-mayor, Song Zengbin, the project comprises five land parcels and involves investment of 11 billion yuan.

New World China yesterday signed a memorandum of understanding (MOU) to develop two sites that will offer one million square metres of space for luxury homes, shops, offices and hotels.

Sun Hung Kai Properties signed an MOU with the city government for the port redevelopment project yesterday, but it would not comment on its investment plan.

Meanwhile, a prominent site in the heart of Hangzhou's commercial area recently put up for tender has drawn interest from Sun Hung Kai Properties and Kerry Properties, according to sources familiar with their business in the city.

The 67,000 square metre commercial site adjacent to Xihu (West Lake), which could be developed to offer up to 170,000 sq m, was a rarity in the crowded central business area of Hangzhou, said Alan Lai Xiaofeng, a general manager at property consultant DTZ Debenham Tie Leung in Hangzhou. 'And it is possibly the best available location,' he added. Mr Lai expected the project to be an integrated commercial development.

He said monthly retail rents in Hangzhou's CBD ranged from about 20 yuan to 30 yuan per sq m, similar to last year's levels.

'The rent was partly suppressed by the central government's cool-down measures for the property sector. The supply of retail space is really tight and a lot of my clients can't find space in retail properties in the CBD area,' Mr Lai said.

Property consultants said rising investment in less developed mainland cities was promoted by improved market transparency attributable to austerity measures.

'Developers like Sun Hung Kai came to study the Hangzhou market about two to three years ago but were not keen to invest as they feared unequal competition from local players,' said an agent in the city, adding that some local developers were given much longer payment periods than foreign firms.

Mainland developers are also showing increasing interest in secondary mainland cities. Hong Kong-listed mainland developer Beijing Capital Land yesterday said it had paid 740 million yuan for a residential site in Tianjin.

'This is the first time Beijing Capital Land has acquired land in a city other than Beijing,' said Tang Jun, president of the company.