(BEIJING) Guocoland Ltd, the developer controlled by Malaysian billionaire Quek Leng Chan, plans to double investment in China property to more than US$9 billion on confidence government efforts to avert a bubble will work.
Guocoland, whose projects include shopping malls, apartments, offices and hotels, said a year ago it planned to invest 33 billion yuan (S$6.6 billion) in new commercial properties in China.
'We should very easily double that,' Violet Lee, head of Guocoland's China operations, said in an interview in Beijing. 'We have much more confidence now because we can sense the central government is taking things very seriously.'
The Chinese government last month ordered state-owned companies to pull out of property development if it's not part of their main business, creating an opportunity for foreign developers.
'The recent policies focus on curbing demand, but China's urbanization and the rising demand for housing are still there over the long term,' said Dai Fang, a Shanghai-based analyst at Zheshang Securities Co. 'With the expectation of a yuan appreciation, it also makes sense for foreign companies to build up investment in China.'
Guocoland's new investments will focus on integrated projects in major cities like Beijing and Shanghai as well as provincial centres, Ms Lee said. The company is also considering expanding its land holdings.
The Singapore-based developer, part of Malaysia's Hong Leong Group, aims to increase its investments over about two years, she added. Ms Lee also sees a 'big, big opportunity' in the Chinese government's demand that 78 state-owned companies exit the property market because real estate isn't their main business.
The company plans to take advantage of the move through 'mutually beneficially working relationships,' she said.
China this week ordered developers not to take deposits for sales of uncompleted apartments without proper approval and barred them from charging 'abnormally high' prices. Real estate prices in Haikou, capital of the southern island of Hainan, jumped 53.9 per cent last month.
The average cost of land in 105 Chinese cities rose 8.1 per cent in the first quarter from a year earlier to 2,700 yuan per sq m, the Ministry of Land and Resources said yesterday.
'We're looking at crazy prices,' Ms Lee said. 'A lot of land prices are beyond what the market can accept. The flour is more expensive than the bread.' The government's measures to cool the housing market won't have any 'major impact' on Guocoland as they mainly target residential projects rather than the company's main operations, Ms Lee said. -- Bloomberg
Source: Business Times, 23 Apr 2010
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