Translated by Andrew Vanburen from a Chinese language piece in First Financial
A HANDFUL of household names among Hong Kong’s property developers spent a whopping 20 bln yuan in the PRC last year building up their land banks.
The “handful” of Hong Kong investors putting up over 20 bln yuan of their money on Chinese properties are: Hutchison Whampoa Ltd (HK: 13), Wharf Holdings Ltd (HK: 4), Hang Lung Properties Ltd (HK: 101), Kerry Properties Ltd (HK: 683) and Chow Tai Fook Enterprises Ltd (HK: 1929).
Though there are no figures readily available on the combined investments in China by these five in 2010, their commitment last year to the PRC’s property market is considerable by any measure.
This marks a transition away from the previously preferred mode wherein Hong Kong-based investors would put their money into listed Mainland-based developers, leaving the individual land-back accretion decisions to the PRC-based parties.
But with the plethora of bargains – both real and perceived – in Mainland China, many Hong Kong-based developers and individual investors are taking matters into their own hands and shopping for deals themselves.
This marks a new phase for Hong Kong-based capital in the PRC property market, characterized by “bargain hunting” and “panning for gold.”
And with the recent sharp falls in China’s real estate sector, Hong Kong money is chasing lower prices like never before.
Among the five mentioned developers throwing their lot in the PRC property market last year, most were on the hunt for cheap parcels of land or affordable projects, and can be classed as "bargain hunters.”
Of the five, it was Hutchison Whampoa that was the biggest spender of the group last year.
From the end of 2010, Hutchison spent a total of over six bln yuan on land projects in Chongqing, Shanghai, Nanjing, Tianjin and Hebei, while inking cooperative joint development deals with property players in the latter two locales.
Just 20 days after the bulk of these transactions were signed, Hutchison Whampoa quickly turned around and acquired – via its Whampoa Changchun unit – a prime development plot in the northeastern Chinese city of Changchun for what can only be described as a fire sale price of just 464 mln yuan.
Then, as 2011 drew to a close, Hutchison Whampoa stretched out its hand to long-time rival Cheung Kong Holdings Ltd (HK: 1) in a combined three bln yuan land grab in the northeastern city of Dalian and the southeastern city of Foshan.
Hutchison Whampoa is no stranger to the mainland, having signed the first of its many joint venture agreements for property development in the PRC way back in 1992.
The Hong Kong-listed property and telecom giant now has projects underway in Beijing, Tianjin, Changchun, Dalian, Nanjing, Shanghai, Changzhou, Qingdao, Chongqing, Chengdu, Wuhan, Xian, Changsha, Guangzhou, Shenzhen, Dongguan, Zhuhai, Zhongshan, Jiangmen and Huizhou.
The developer states on its website that it “will continue to consider investment in other Mainland cities.”
Therefore, it should come as no surprise that Hong Kong is looking to capitalize on the cheap land and affordable developments mushrooming across the expanse of the PRC, and investors would be wise to keep an eye on this "development among developments."
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