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JVs formed to reap property windfall
16/2/2005 14:46

Shanghai Daily news

Three Hong Kong land developers announced recently that they have formed investment vehicles to exploit profits from booming real estate sector in Shanghai.
Cheung Kong (Holdings) Ltd and Hutchison Whampoa Ltd announced before the Lunar New Year that they have set up a 50-50 joint venture for the purpose of owning and developing a land plot in Shanghai.
The two Li Ka-shing controlled companies will jointly invest about 645.8 million Hong Kong dollars (US$77.81 million) into developing a 130,000-square-meter residential project in Maqiao of Minhang District.
In addition, Hong Kong's K. Wah International Holdings Ltd said earlier this month that it has set up a joint venture with Shanghai Baosteel Group Corp to invest in the state-owned Shanghai Baosteelland Co.
"The joint venture shall be established for the principal purpose of property development and investment in Shanghai and Beijing," said K. Wah in a statement.
The total investment amount of the joint venture, Shanghai Baoland Co Ltd, is 2.1 billion yuan (US$253 million).
"The joint venture will receive benefits in terms of profit returns," said the statement.
Shanghai's housing prices have risen for five consecutive years.
Investment in the real estate sector increased 30.4 percent to 117.55 billion yuan in 2004 from a year earlier, according to the Shanghai Statistics Bureau.
Sales value in the residential sector totalled 226.38 billion yuan in Shanghai last year, a rise of 58.9 percent from a year earlier.
"China's real estate market is still developing. Well-located and high-quality projects in major cities will continue to provide excellent opportunities as China further integrates with the global economy," said David Noh, head of Merrill Lynch Global Principal Investments in Asia.
The average monthly premium and Grade A rentals rose 6.8 percent to US$23.7 per square meter in Shanghai in the fourth quarter of last year from a quarter earlier. The rentals are expected to expand 6 percent in the next 12 months, according to Colliers International.