China property

China Vanke wins prime site and assets in auction for 55b yuan

China’s second-largest developer beat seven rivals to win a package of assets held by a bankrupt firm of the Guangdong government

PUBLISHED : Thursday, 29 June, 2017, 8:06pm
UPDATED : Wednesday, 05 July, 2017, 3:54pm

China Vanke, the country’s second-largest homebuilder, has won on Thursday a huge asset package from a bankrupt state-owned company that includes a mega prime site in Guangzhou for 55.1 billion yuan in a public auction.

This is the first sizable acquisition by the developer after a near two-year shareholder tussle.

Vanke beat seven other developers in the ferocious bidding war for the assets of Guangdong Trust and Real Estate Development Corporation, the liquidated real estate arm under Guangdong government. The auction attracted the participation of eight developers, including Evergrande, China Overseas Land & Investment and Country Garden.

The most eye-catching asset in the package is a one million square metre site in Huadiwan of Liwan district, west Guangzhou.

“It’s a very rare land parcel, it’s almost impossible to find such a large site in China’s first-tier city now,” said Long Bin, a real estate expert from the Guangzhou Real Estate Association.

Guangdong Trust and Real Estate bought the site back in 1988 for 280 million yuan, or 218 yuan per sq m. The original construction plan included commercial, residential and recreational spaces, along with parks, schools and a hospital.

But the company went bankrupt in 1999 as a result of the Asian financial crisis and Huadiwan’s development has been suspended since.

It’s a very rare land parcel, it’s almost impossible to find such a large site in China’s first-tier city now
Long Bin, Guangzhou Real Estate Association

The acquired package also contains a number of smaller unfinished projects in Guangzhou and Foshan, as well as Guangdong Trust and Real Estate’s estimated 8 billion yuan in debts.

Huang Tao, a project manager at Guangzhou-based real estate agency Centaline, said it was difficult to pin down the price that Vanke has paid for the Huadiwan site due to the debts and other sites included in the package.

But Huang believed that the price for the site would be less than what a nearby site had cost when it was sold last year, even though Huadiwan has a better location. The nearby site was sold at a record 42,000 yuan per sq m to Poly Property.

According to Anjuke, an online property services provider, the average new home price this month for the Huadiwan neighbourhood is 50,000 yuan per sq m.

Guangzhou Real Estate Association’s Long added that Huadiwan’s development could become complicated as Vanke has to first deal with the debt restructuring.

Vanke has just emerged from a two-year struggle to fend off hostile takeover attempts from insurance company Baoneng Group and rival China Evergrande.

The battle ended this month after state-owned Shenzhen Metro, which supports Vanke’s current management team, took over control of the developer.

Shenzhen Metro to become biggest China Vanke shareholder as Evergrande cashes out

Vanke’s chairman Wang Shi last week announced that he will step down by the end of June, handing the baton to president Yu Liang.

The company’s contracted sales in the first five months amounted to 228 billion yuan, rising 54 per cent from a year ago, second only to Country Garden among Chinese developers.