China developer Greenland bets on infrastructure projects
State-owned Greenland Holdings, one of China’s top three developers, is expanding its investment into government infrastructure projects such as subways and botanical gardens in a bid to obtain access to prime land resources amid fierce competition.
“Infrastructure is very related to our core business. For example we are seeking to tie our property developement with metro investments, just like Hong Kong’s rail-plus-property model,” said Jimmy Wang, Greenland Holding’s director of general office in Hong Kong.
The company won the contract for the Nanjing subway line 5 project in September.
The Shanghai-based property giant has stepped up diversification in recent years as its existing real estate business is under pressure because of soaring land prices and increasing competition.
It has set up three new businesses – infrastructure, finance and consumption – as part of the company’s strategy to boost revenue.
Wang said infrastructure would be the priority among the new sectors as it will create synergy with real estate development.
In the latest move, the developer has raised its stake in Hong Kong-listed Broad Greenstate International, a green engineering company, to 25 per cent, becoming the second largest shareholder.
As Greenland’s future green business platform, Wu Zhengping, chairman of Broad Greenstate, said the company will focus on bidding for government public-private partnership (PPP) projects such as theme parks and urban green space.
It will launch a 2.3 billion yuan botanical garden project in Taiyuan city soon, Wu added.
Greenland said its infrastructure investment would include subways, highways, gardens and sewage treatment, and it expects the business unit’s sales to exceed 100 billion yuan in 2016.
However, Wang stressed that real estate is still Greenland’s core business.
Besides the domestic market, the company has been on a shopping spree for overseas real estate projects.
Greenland currently owns nearly 20 projects in 10 countries, including US, UK and Australia.
After years of overseas experience, Wang said the developer plans do more acquisitions rather than land development and to invest in more commercial properties in foreign countries.