China property

Socam Development sells Guizhou land site to Country Garden for HK$463m

PUBLISHED : Tuesday, 05 January, 2016, 9:10pm
UPDATED : Tuesday, 05 January, 2016, 9:27pm

Socam Development is the latest developer to exit the mainland’s third-tier cities after it agreed to sell a residential-commercial site in Guizhou to Chinese developer Country Garden for HK$463 million.

The developer and contractor expects the sale to record a loss of HK$245.9 million because the carrying value of the site in Zunyi was lifted by the fair value increase of HK$221 million previously recognised by the group in its consolidated income statement, according to its filing to the Hong Kong stock exchange ahead of the opening of the stock market.

The 296,250 square metre site, which could yield a total gross floor area of 780,000 sq metres, is located in Honghuagang district, Zunyi city, Guizhou.

The project, due to be completed in 2018, comprises townhouses, high-rise apartments and retail elements, according to the latest issue of interim report.

“The disposal represents an opportunity for the group to realise its investment in the Zunyi project as part of the group’s strategic monetisation plan for its property portfolio which make a positive contribution to the cash flow and financial position of the group,” it said.

Completion of the deal will be no later than January 15, it said.

Shares of Socam eased 0.893 per cent to close at HK$4.44 after the announcement of the asset disposal.

The contractor and developer sale comes after a number of Hong Kong property firms have sold down their assets on the Chinese mainland – mainly in second and third-tier cities which are suffering from oversupply problems. Last week, New World Development and controlling shareholder Chow Tai Fook Enterprises announced the sale of five projects in Shanghai, Beijing, Qingdao, Chengdu and Guiyang to Evergrande Real Estate Group for HK$24.4 billion.

It was the second sale to Evergrande in December following New World China Land’s sale of three projects in Hubei, Guangdong and Hainan provinces for HK$16.36 billion.

Nan Fung Group also sold its 20.5 per cent stake in mainland developer Sino Ocean Land to insurer Anbang for HK$7.8 billion.

Socam Development said it would continue the asset monetisation plan in a bid to strengthen its balance sheet with a significant reduction of bank borrowings and net gearing.

In 2015 it completed the disposal of its 65 per cent interest in Beijing Centrium Residence

and its 80 per cent stake in the Shanghai 21st Century Tower Project, comprising Four Seasons

Hotel Pudong and branded residence Four Seasons Place for a combined HK$1.06 billion.