Business park developer sets 4b yuan floor area target

Wuhan-based Optics Valley Union Holding, the mainland's second-largest commercial business park developer and operator in terms of area, is to spend nearly four billion yuan (HK$4.98 billion) this year to double the amount of gross floor area completed last year.

Of the capital outlay, construction cost will be three billion yuan and land premium payable 800 million yuan.

"We plan to complete 800,000 sqmetres of business parks this year, compared with 400,000 sqmetres in 2013, said Huang Liping, the company's founder and chairman.

With 8.69 million sqmetres of gross floor area completed or under construction and land set aside for future development, Optics Valley ranks as the mainland's No 2 business parks company after Tian'an Cyber Park, which has 9.46 million sqmetres. Shui On, which holds 4.1 million sqmetres, is ranked fifth.

Huang said negotiations to develop business parks in Beijing, Shanghai, Xian in Shaanxi province, Chengdu in Sichuan and Tianjin were under way.

Optics Valley, which was listed in Hong Kong in March, had a land bank of about seven million sqmetres, sufficient for seven years of development, he said.

The company and its joint ventures had completed 15 business parks in Wuhan and Ezhou in Hubei province and Qingdao in Shandong, and three residential projects in Wuhan and Huangshi in Hubei by December last year.

It has 1.14 million sqmetres of gross floor area under development and 5.38 million sqmetres set aside for future development.

Huang, who controls a shareholding of 63.6 per cent in Optics Valley, aims to achieve a gross profit margin of more than 30 per cent given the company's low land cost and fast asset turnover.

Its average land acquisition cost was 395 yuan per square metre, which accounted for just 6 per cent of its average selling prices.

In order to achieve quick cash flow turnover, the company would take nine to 12 months between land acquisition, planning design, the start of construction and offer of projects for pre-sale.

In this week's C-Suite interview, Huang talks about the outlook for business parks on the mainland