China SCE Property sees continuing opportunity in first-tier cities
Fujian-based developer believes prices in leading mainland cities will continue to narrow the gap with global centres such as Hong Kong and New York
China SCE Property is shifting its investment focus to first-tier cities such as Beijing in the expectation that prices will continue to rise in the capital city owing to a shortage of supply.
In March, the Fujian-based developer won a land parcel in suburban Beijing Mengtougou District at public auction for nearly 4 billion yuan (HK$4.73 billion), a record 41,000 yuan per square metre. The deal followed an acquisition in December where it spent 500 million yuan for land in the city’s Changping Distirct.
“China’s domestic resources are concentrated in Beijing and Shanghai. The home prices there should be comparable with world top cities like New York or Hong Kong,” said Huang Youquan, executive director and vice president of China SCE.
With a target to launch sales next March or April, Huang said he expects the Mengtougou project’s selling price to exceed 60,000 yuan per square metre, compared to current transaction prices of 50,000 yuan on average in the region.
New home prices in Beijing rose 14 per cent on year in May, slower than Shanghai and Shenzhen, where prices surged 21 per cent and 59 per cent respectively, according to data provider China Real Estate Information Corp.
“Land supply has been very limited in Mengtougou, so we are confident of about 20 per cent home price growth in the area in the coming year,” Huang said.
Headquartered in Xiamen city of Fujian Province, China SCE has expanded its presence both in Fujian Province and across the mainland including Beijing, Shanghai, Shenzhen and Nanchang in Jiangxi Province.
The company plans to spend 70 per cent of its 7.5 billion yuan land purchase budget to buy plots in first-tier cities, including Beijing, Shanghai and Shenzhen, this year.
We may further increase the budget for first-tier cities, Huang said. As competition for land in China’s top cities sizzled, Huang said China SCE has been active in seeking acquisition opportunities and that will be the key method to enrich their land bank.
The developer in April acquired a semi-completed villa project in Shanghai for 617 million yuan. The seller, a fellow Fujian-based company, had bought the land for 735 million yuan in 2015.