Property firm China Overseas Land & Investment shrugs aside Beijing funding curbs to acquire Zhuhai plot for record $1.6 billion

27-Nov-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Property developer China Overseas Land & Investment (Coli) has shrugged aside tightening government curbs on financing to acquire a residential and commercial plot in Zhuhai for the record sum of 10.5 billion yuan (US$1.6 billion), it said on Wednesday.

The plot can yield 450,000 square metres in gross floor area, of which about 385,000 square metres have been earmarked for homes. The rest of the land has been set aside for commercial use, such as the development of hotels, shopping malls and community facilities.

Coli topped the plot’s reserve price by 25 per cent and smashed a record set by state-backed conglomerate China Metallurgical Group, which bought a 227,800 square metre plot for 5.01 billion yuan three years ago.

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The developer is betting on upbeat sentiment surrounding Zhuhai, which is part of Beijing’s Greater Bay Area development zone. Analysts said it would not miss the chance to invest in the city despite Beijing tightening funding for builders.

“Such a high premium and the large sum shows that Coli has confidence in Zhuhai’s development,” said Pan Hao, senior analyst with Research, a unit of US-listed Chinese online property portal Ke Holdings.

The smallest of the nine cities in Guangdong province that come under the Greater Bay Area, Zhuhai saw its per capita gross domestic product rise to 175,500 yuan last year, second only to Shenzhen among its mainland bay area peers. Home prices have almost tripled over the past decade and fetched 26,000 yuan per square metre in October.

Zhuhai has been able to recruit technology start-ups as well as some of China’s biggest companies, including Huawei Technologies, Tencent Holdings and ZTE, to help it build a smart city. Tesla launched an integrated customer experience centre in the city last week, saying that Zhuhai “will be the pivot of Tesla’s future development in the Greater Bay Area”.

Coli’s Silver Bay, an ultra luxury residential development, overlooks the Hong Kong-Zhuhai-Macau Bridge and Macau’s Grand Lisboa hotel and casino.

Its latest acquisition in the city comes in a tough credit environment for Chinese developers. Beijing has tightened borrowing criteria for the sector under a framework known as the three red lines. It caps debt-to-asset ratio for developers at 70 per cent excluding advance receipts, net debt-to-equity at 100 per cent and short-term borrowings at no more than cash reserves.

Failure to stay within these red lines may result in companies being cut off from access to new loans from banks, the state-owned Economic Information Daily reported in August.


Category: China

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