Guangdong’s Country Garden continues investment in Hong Kong, despite Beijing’s capital controls
Developer pays $312.3 million for a 60 per cent stake in waterfront site in Ma On Shan, Hong Kong
Country Garden, the Guangdong-based property developer, has splashed out HK$2.44 billion (US$312.3 million) on a 60 per cent share of a waterfront residential site at Ma On Shan in Hong Kong, marking the company’s second investment in the city within four months, despite stricter capital outflow controls by Chinese government.
The share has been bought from Hong Kong’s Wang On Properties by Country Garden subsidiary Angel View, and the site – at Yiu Sha Road, Whitehead, along the eastern coast of Tolo Harbour in Hong Kong’s New Territories – has an estimated gross floor area of 387,500 square feet
That represents HK$10,500 per square foot and Wang On said the buyer has already paid 10 per cent of the total price as a deposit.
“We are very bullish about Hong Kong’s property market,” said Country Garden’s chief financial officer Wu Bijun.
The investment comes just weeks after the mainland government requested Chinese investors needed special approval from Beijing to plough money into overseas property, in an effort to curb capital flight. The policy sparked initial concerns that mainland capital would disappear from Hong Kong’s real estate market.
But Wu said her firm had enough offshore capital to fund the Ma On Shan purchase.
According to Wang On’s statement, the Hong Kong developer has also agreed to advance a loan of HK$600 million to Angel View, at a 0.7 annual interest rate over 12-month HIBOR, for 24 months.
Country Garden entered the Hong Kong market in June for the first time, acquiring a redevelopment project in Kowloon City for HK$610 million. The company also has residential projects in Malaysia and Australia.
During its interim result briefing last month, the Hong Kong-listed Guangdong developer said it had a very prudent overseas investment strategy.
“We always start with small projects in cooperation with respectable local partners,” the company said at the time.
The Ma On Shan site’s development has actually seen a series of twists and turns in recent months.
Mainland developer China City Construction (International) was forced to sell the plot, won in a 2014 government tender, to Wang On in June, after encountering financial difficulties to proceed with construction, amid Beijing’s tightened controls on capital outflows.
Wang On paid HK$2.7 billion for the whole site at that time, by transferring 60 per cent to Country Garden, meaning the latest development has pocketed a tidy profit of around HK$800 million for the former, in just three months. It said at the time it planned to create a development of luxury flats and villas.
Separately, the Hong Kong government awarded a residential site in Tai Po to Manhattan Group’s subsidiary, Manifold Limited, for HK$323 million, or HK$5,506 per square foot, on Tuesday.
The firm is owned by James Tien Pei-chun, the former chairman and leader of the Liberal Party and a former member of the Legislative Council of Hong Kong.