Guocoland to double investment in China

Guocoland Ltd, the developer controlled by Malaysian billionaire Quek Leng Chan, said China’s efforts to avert a property bubble has encouraged the company confidence to double its investment in the country.

Guocoland, whose projects combine shopping malls, apartments, offices and hotels, said a year ago it planned to invest 33 billion yuan (US$4.8 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.”

Property prices in China surged by a record 11.7 per cent in March from a year earlier, prompting the government to announce measures last week that increased the size of down payments, raised interest rates on second homes and barred banks from funding purchases of third homes.
Guocoland’s new investments will focus on integrated projects in major cities like Beijing and Shanghai as well as provincial centers, 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, Lee said. She 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 without elaborating.

China yesterday 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.

‘Crazy Prices’

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 square meter, the Ministry of Land and Resources said yesterday.

“We’re looking at crazy prices,” 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, Lee said.

By Bloomberg