Foreign funds take stakes in HKC to enter Shanghai property scene

Property developer HKC (Holdings) is seeking to invest in large-scale and upmarket real estate projects in Shanghai, despite government efforts to cool the economy, honorary chairman Wang Jun announced.

Mr Wang, former head of state-owned Citic Group and Poly Group, said yesterday that government macroeconomic measures would keep the buoyant economy stable and sustainable and that he would make use of his connections to help secure projects.

The construction contractor-turned-developer aims to at least double its land bank from 1.6 million square metres to three million to five million square metres in the next 12 months, largely in Shanghai, according to managing director and chief executive Eric Oei said.

Mr Oei said the rental yield of commercial properties varied commonly between 8 per cent and 10 per cent in the mainland, higher than the average range of 3 per cent to 5 per cent in Hong Kong.

Funding for land acquisitions would come from the HK$9.36 billion HKC raised yesterday by placing shares to private equity funds such as New York-based Cerberus and Asia-based Penta Investments Advisers, as well as a term loan, he added. Part of the funds would be used to finance the development of wind farms in Inner Mongolia.

News of the fund-raising exercises sent HKC shares up 19 HK cents, or 6.51 per cent, yesterday to a record HK$3.11.