Since its Hong Kong listing in 2010, China SCE Property has become one of the biggest developers in southern China’s Fujian province, expanding its footprint to the country’s top cities including Beijing, Shanghai and Shenzhen. Executive Director and Vice President Huang Youquan said the company has kept a cautious, but stable growth outlook, a strategy garnered from a partnership between its parent company and Japanese enterprises over the years. China SCE Property has been eyeing acquisition of projects in the secondary market to support expansion, amid stiff competition for land sites. What is the company’s strategy to obtain land this year? Project acquisition will be our focus. So far this year, we have already bought two projects, one in Hangzhou and the other in Shanghai. We also increased our stake to 100 per cent in a project in Fujian province. Land can be very cheap in the secondary market (compared to public land auction). The plot we bought in Hangzhou’s Xiaoshan this February cost only 2,000 yuan (HK$2,360) per square meter, the average transaction prices in the area were 9,000 per square meter at the time, and that has continued to appreciate in recent months. Are there many opportunities to find affordable land? Yes, but what’s more important is our skill to redevelop these projects. To be honest, secondary projects usually have a lot of problems and that’s why others want to sell them. Taking such projects challenge a developer’s overall operating capabilities and whether it can establish an appropriate plan to digest the project. Most common problems include product positioning, housing type design, taxes and so on. It is not easy to make sure a redevelopment is legal and within a reasonable budget. The Shanghai project we purchased in April had approached many potential buyers, but the original developer decided to sell to us in the end and to exit from the market. The average cost was only 8,000 yuan per square metre. What are your big projects to roll out this year? We plan to sell eight to 10 new projects this year. Two in Beijing, two in Shanghai, one in Shenzhen, Tianjin and Nanchang (in Jiangxi province) for each, and three in Fujian province. We expect projects in Beijing, Shanghai and Shenzhen to contribute the most, especially the Tianchen project at Beijing’s second ring road, and the third phase of Siji Yangguang project in Shenzhen’s Longgang. The land cost for both projects were very cheap as we acquired the plots many years ago, so the gross margin could be pretty good. We expect the selling price of Tianchen to be more than 100,000 yuan per square metre, and Siji Yangguang to be around 33,000 yuan per square metre. The competition for land in China’s first-tier cities is very intense, are you also looking to other markets ? We are actively looking for opportunities in areas surrounding top cities, for example, Huaqiao town in Kunshan city. Huaqiao belongs to Jiangsu province but is the first stop on the metro line from Shanghai to Jiangsu. Another example would be Yanjiao, which is very close to Beijing and we view it as a part of the Beijing market as most home buyers there come from Beijing. We also seek opportunities in hot second-tier cities such as Nanjing, Hangzhou, Hefei and other potential markets. But we would not expand to too many cities as we believe market divergence is going to continue for a long time in China. As resources are concentrated on several leading cities, they can have large population inflows every year to prop up the home price. Prices will continue to go up in the top four first-tier cities and six to 10 second-tier cities, but will hardly pick up in other cities. What is your destocking plan for your existing projects in smaller cities? Our unsold apartments are mainly in cities in Fujian province. We have provided discounts in order to speed up sales. Collection of cash is always our priority. With discounted prices, we have cleared most of our inventories in Quanzhou and Longyan city. In Quanzhou, we topped the sales last year, selling more than 3.3 billion yuan. How’s your first industrial property project in Xiamen going? We originally planed to make it a logistics property as its location is very good, sitting next to the prospective Xiamen new airport. However, the local government has issued some new policies after we purchased the land which make it difficult to execute our original plan. We have also learned from other developers that it is not easy to make profit through logistics properties. We have decided to mainly focus on residential projects on the land. With the construction of the new airport, transportation from downtown to the area will be much improved and we are very optimistic about home prices there.