Warburg plans property binge
By Hui Ching-hoo and Joy Lu (China Daily)Updated: 2006-12-22 13:56 US-based private equity fund Warburg Pincus plans to pour US$400 million into the mainland property market over the next four years, reflecting confidence in the sector's long-term prospects.
One of the oldest and largest private equity funds in the world, Warburg Pincus has about US$10 billion under management.
It earlier said that it planned to invest half of its US$1.2 billion global property fund in Asia.
Chinese property company stocks have surged in recent months, with interest on renminbi assets outpacing the impact of government tightening measures.
Warburg Pincus Asia LLC Managing Director Philip Mintz told China Daily the fund is interested in medium-sized players with a focus on medium- and upper-class residential projects.
For example: "Greentown China is the type of developer we are looking for," he said. "The units the developer sells are priced at 7,500 yuan (US$937.5) per square metre, with an average size of 100 square metres."
The thriving economy and increasing spending power means there will be a strong demand for medium-sized flats, he added.
Greentown China is a Hong Kong-listed property firm headquartered in Hangzhou, capital of East China's Zhejiang Province. It has developed more than 2.0 million square metres of properties since 1995.
Mintz said a reasonable land bank will be one of the key consideration for Warburg Pincus's investment in China "5 to 10 million square metres of land bank or whatever is sufficient to cover development for the next three or four years."
Greentown China has one of the largest land banks among mainland developers, with some 8.6 million square metres of gross floor area under development at more than 80 projects, mainly in Shanghai and Hangzhou.
But Warburg Pincus will not limit itself to China's most crowded property
markets. "Second-tier cities such as Shenyang and Changsha will be at the top of
our list," said Mintz. Shenyang and Changsha are the provincial capitals of
Northeast China's Liaoning and Central China's Hunan provinces respectively.
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