Golden Wheel Tiandi on a roll with metro projects

For Golden Wheel Tiandi Holdings, the strategy of developing properties close to metro stations on the mainland has paid off in a market downturn.

“As market conditions have changed abruptly, projects in inferior locations will hardly entice buyers even if they are offered a discount. But the marketability of properties with easy access to metro stations will certainly do better,” said chairman Wong Yam-yin.

Taking advantage of the downturn, Wong said the small developer bought seven sites for 1.65 billion yuan (HK$2.05 billion) in the past two years.

Three sites are in Nanjing, while two are in Changsha, and one each in Wuxi and Zhuzhou.

The company also teamed up with Powerlong Real Estate to buy a plot in Yangzhou.

“These sites are either located close to metro stations or high-speed train stations,” Wong said.

The firm went on the buying spree after raising about HK$695 million in net proceeds from an initial share sale in January 2013. It also sold senior notes raising 600 million yuan in April 2013 and 300 million yuan in December last year.

Including the price of the plots, Wong expects each project to require an investment of 800 million yuan to one billion yuan.

Golden Wheel has six projects under development, with a total gross floor area of about 571,240 sq metres. Factoring in its 49 per cent interest in the commercial-residential project in Yangzhou, Wong said the company’s total gross floor area would be 892,000 sq metres.

He said he expected the firm to pull in seven billion yuan in revenue if all of its property stock was sold.

Golden Wheel’s sales rose 90.6 per cent to 549.52 million yuan in the first six months of last year, but gross rental income was flat at 56.86 million yuan.

Besides property sales, Wong said the company was also building a leasing portfolio of 70,000 sq metres of retail space at metro stations.

He said the firm had obtained the leasing and operating contracts rights for 13 metro shopping malls in Nanjing, Suzhou, Changsha and Wuxi.

According to the National Development and Reform Commission and the Ministry of Housing and Urban-Rural Development, 12 cities already had metro systems in operation and 21 more were planning to develop theirs as of April 2012.

“We believe the continuing development of metro systems in second and third-tier cities will create significant opportunities for developing and investing in metro-linked commercial properties, like lifestyle shopping malls,” Wong said.

In C-Suite, Wong Yam-yin talks about his diversification from hardware trading business into property and his strategy to sharpen competitiveness