SIUD will replenish land through old town renovation to maintain low land cost

Shanghai builder's strategy is to focus on old town renovation jobs

PUBLISHED : Wednesday, 27 May, 2015, 1:34am
UPDATED : Wednesday, 27 May, 2015, 1:50am

Shanghai Industrial Urban Development Group will keep its land costs low by replenishing its land bank through old town renovation and secondary development projects.

"We will neither join the bidding war at government land auctions nor create any land kings," chairman Ji Gang said.

Ji said the company, which was set up in June 2010 and has a market capitalisation of HK$13.33 billion, had built 600,000 sq metres of government subsidised housing in response to the official call to provide more homes for the low-income group.

"Although subsidised housing provides limited profit, our effort has been recognised by the municipal government. In other words, the government will also give us support when it comes to looking for land," he said.

SIUD is 71 per cent owned by Shanghai Industrial Holdings, which in turn is controlled by Shanghai's municipal government.

Ji said his company had signed a strategic cooperation deal with the Songjiang district government in Shanghai to conduct a feasibility study for the redevelopment of its industrial zone into a commercial district.

Without disclosing further details, he said the initial plan was to relocate the ageing factories to make way for office developments.

Ji also said the firm would also be interested in participating in old town redevelopment projects.

"There are 30 such redevelopment projects under consideration by the municipal governments. Some are big and some are small in scale. We will study how we can participate," he said.

For instance, the company has teamed up with Sun Hung Kai Properties on an integrated development in Xinzhuang subway station, one of the oldest interchange hubs in Shanghai, for a total investment of 10 billion yuan (HK$12.5 billion).

The cost of the site, which could yield a gross floor area of 6.51 million sq ft, was 415 yuan per square foot when it acquired the project in September 2010.

SIUD's profit margin stood at 38 per cent last year.

The company has a land bank of eight million sq metres in Shanghai, Shenyang, Chongqing, Changsha, Zhuhai and Shenzhen. All the sites could yield 14 million sq metres.

"We will focus on the Yangtze River Delta," Ji said, pointing out the area accounted for about 30 per cent of the company's land bank.

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