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.
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