Source: Bloomberg News | 2013-1-25 | NEWSPAPER EDITION
CHINA Vanke Co's Hong Kong unit jointly won a HK$3.43 billion (US$442 million) bid for a site in the city, marking the entry into the first new market for the biggest developer listed on Chinese mainland exchanges.
Vanke Property (Hong Kong) Co and New World Development Co won the 13,804 square-meter site by the Tsuen Wan West railway station in the city's northwest, according to a faxed statement from subway operator MTR Corp. At least 894 apartments, with over half smaller than 50 square meters, will be built on the site, it said.
The winning bid comes after China Vanke last week announced a plan to shift trading of its foreign-currency shares from Shenzhen to Hong Kong to access a bigger pool of global investors. Hong Kong's home prices have doubled in the past four years on record low mortgage rates, a lack of new supply and an influx of Chinese mainland buyers.
"Together with the company's share conversion plan, the developer's land acquisition in Hong Kong is also part of its bigger plan to expand in international markets," said Tian Shixin, a Shanghai-based property analyst at BOC International China Ltd. "They'll need to build up their Hong Kong unit to some scale to make financing easier in the future."
The site will include a sports complex, according to tender documents. Vanke Property (Overseas) Ltd, owned by Vanke's Hong Kong unit, halted trading yesterday ahead of an announcement.
Vanke Property (Overseas) said its parent bid for the site, contrary to media reports that said it's buying the land. The stock will resume trading today, it said in a statement to the Hong Kong exchange.
MTR, partly owned by the government, sells land to developers for a cut of profit.
China Vanke shares rose 2.2 percent to 11.95 yuan (US$1.92) at the close of trading in Shenzhen, the highest in over three years. New World, controlled by the family of billionaire Cheng Yu-tung, climbed 2.6 percent to HK$15.04, the highest since November 2010 at the close in Hong Kong.
China Vanke, based in Shenzhen, last year paid HK$1.08 billion for a 74 percent stake in Winsor Properties Holdings Ltd, which was renamed Vanke Property.
The bid price was much higher than the market expectations of between HK$2.7 billion and HK$3.1 billion, Deutsche Bank AG analysts, led by Tony Tsang, said in a note to clients on Wednesday. The possibility for the government to announce more property restrictions is increasing after comments from several senior officials, the German bank said.