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Peggy Sito

Developer, parent on 10b yuan buying spree

China Resources Land, a Hong Kong-listed red-chip developer, plans to spend about five billion yuan on land acquisitions this year, similar to its budget last year, betting that the market will continue to rise despite the government's austerity measures.

Managing director Wang Yin yesterday said the company's parent, China Resources (Holdings), would also spend five billion yuan, taking the group's total spending to about 10 billion yuan this year compared with 10.7 billion yuan last year.

'China Resources Land will take about half of the 10 billion yuan,' he said after the company's annual general meeting. 'I believe the housing market will perform steadily after the central government regulated the market through austerity measures.'

Fearing that the property market was growing too fast, Beijing imposed capital gains tax on property sales last year and has urged lenders to tighten loans to developers.

China Resources Land has paid about 800 million yuan for two sites - one in Wuhan, Hubei province and  another in Hefei, Anhui province, while China Resources Holdings paid 2.9 billion yuan for two sites in Wuhan - one in Wuchang district and another in Hanyang district.

China Resources Land also expanded its land  bank by buying sites from its parent, including those in Beijing and Chengdu for HK$2.7 billion in November, a strategy Mr Wang said  it would continue to use 'when the time was right.'

The company's investor relation manager Cheng Chau-ping said pre-sales for its residential project Wuhan Phoenix City in Wuchang district 'were not bad'.

'Home prices in Wuhan lagged behind but has now been picking up,' Mr Cheng said.

Wuhan's economy grew 14.8 per cent last year, the highest in the past decade, according to the city government. Income per capita grew 13.9 per cent to 12,360 yuan a year - the highest in the past 11 years.

Mr Wang said the company aimed to complete and book property sales of 620,000 square metres of gross floor area  this financial year compared with 400,000 square metres in 2005.

In the first five months, the firm sold  32,000 square metres of  gross floor area of properties. It expects completed properties to almost triple to 1.8 million square metres next year.

China Resources Land, whose shares have jumped 14.5 per cent since the beginning of the year, last month raised about US$500 million from a share placement to fund land acquisitions.

The company, one of a few listed mainland developers with strong rental income, last year saw this segment  contribute 800 million yuan to earnings. Mr Cheng expects double-digit growth in this division this year.

Its major investment properties include City Crossing Phase One in Shenzhen, China Resources Times Square in Shanghai and China Resources Building in Beijing.



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