Huang Liping sees role for business parks in growth of China's cities

Huang Liping was a lecturer before he became a property developer.

Huang is the chairman of Optics Valley Union Holding, a business park developer which listed on the Hong Kong stock exchange in March. He is also the chairman of Shanghai-listed Wuhan East Lake High Technology.

After Huang left the Wuhan Institute of Water Transportation Engineering, now Wuhan University of Technology, where he was a lecturer, in 1988, he started a magazine, invested in biotechnology, manufactured batteries and finally entered property development in 1998.

His first property investment was for a 10 per cent shareholding in Wuhan United Real Estate.

In 2005, Huang became the controlling shareholder of Wuhan United and acquired a 62 per cent interest in Wuhan Optics Valley Union from Wuhan East Lake.

Wuhan Optics was established in 2000 and is mainly involved in the development and operation of commercial business parks.

At the time of the acquisition, its principal projects included the Optics Valley Software Park.

The company has now completed 15 business parks focusing on different industries. The parks are mainly in Wuhan and Ezhou in Hubei province and in Qingdao in Shandong province.

Wuhan Optics also has three residential projects, in Wuhan and Huangshi in Hubei province.

How does Optics Valley differentiate itself from other developers, which have been severely hit by credit tightening and property market cooling measures that have curbed investment demand?

We are mainly focused on developing business parks, which are not affected by austerity measures such as those that restrict homebuyers. Our clients can freely buy multiple units.

We have developed a multithemed portfolio of business parks to cater to various enterprises. These firms are engaged in financial services, digital media, industrial design, high technology, software development and next-generation information technology.

Most of our corporate buyers pay cash or apply for a five-year 50 per cent mortgage loan to finance their purchases. Our business parks have attracted global corporations and mainland blue-chip enterprises such as Schneider Electric, Bank of Communications, China Everbright Bank, Wistron, Taikang Life Insurance and Guohua Life Insurance.

What is the potential for the business park market on the mainland?

Demand for business parks in prefecture-level cities such as Ezhou and Huangshi, in Hubei, remains strong.

We have been approached by other municipal governments, including that of Qingdao, to expand into their cities.

As commercial parks can help attract enterprises to set up offices in their cities and promote local industry, they can spur economic growth.

For instance, our land cost in Qingdao is just 200 yuan (HK$249) per square metre, as competition is less fierce than for residential sites.

Given our speciality in building business parks, we are able to provide tailor-made services to our clients that only a few developers can offer.

In general, our average land cost is 395 yuan per square metre, accounting for just 6 per cent of the average selling price. It is relatively low compared with that of large developers.

For instance, land cost accounts for 10.6 per cent of Country Garden Holdings' average selling price and 26.9 per cent of Sino-Ocean Land Holdings'.

With low land costs, we are able to achieve an average of 35 per cent gross profit margin.

What kind of special features in the commercial business parks do most of your clients ask for?

Most of our clients in software development or information technology require high ceilings and large floor plans with a strong power back-up.

For instance, our Creative Capital park in Wuhan mainly targets the creative industry. The buyers are artists, painters, sculptors and advertising companies. They usually ask for studios of 200 to 500 square metres with ceilings as high as 7.5 metres.

The studios can be used for work and exhibitions by these artists, who are overseas Chinese from Germany, France, the United States and Indonesia.

We have sold 40 studios to various famous artists at an average of 20,000 yuan per square metre.

How do business parks facilitate urbanisation?

We have assisted local governments in developing the locations of our large business parks and their surrounding areas into new city centres, which offer job opportunities and fully functional living communities for new urban residents.

This will avoid the overbuilding problem other cities have encountered and reduce the risk of creating "ghost towns".