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Vanke teams up with Singapore firm China Vanke, one of the mainland's largest property developers, announced yesterday that it would team up with GICRE, the real-estate arm of the Government of Singapore Investment Corporation, to develop property projects in Chengdu, the capital of Southwest China's Sichuan Province. As part of the collaboration, the Shenzhen-listed company will sell 40 per cent in Chengdu Vanke Property in which it holds a 95-per-cent interest to Reco Ziyang, a wholly-owned subsidiary of GICRE, at a consideration of 4 million yuan (US$483,675). Chengdu Vanke Property, a Sino-foreign joint venture after the completion of equity transfer, will develop a residential project named Vanke New Town in the capital of Sichuan Province. The proposed project is located near the city's Chengdu-Chongqing Expressway and covers more than 30 hectares. The partnership comes at a time when China has taken a series of measures including credit tightening to rein in overheated investment in the property market. Property analysts have said the country's tightening efforts would help phase out cash-strapped and small developers and improve transparency. But larger developers have sought to reduce reliance on bank borrowing as the mainland's credit squeeze continues. "It is the beginning of foreign strategic investment for Vanke. It also reflects our continuing efforts to diversify project financing on the mainland," said a company official who asked not to be named. Apart from bank borrowings, Chinese enterprises have few choices to seek capital as the financial market is still nascent. Vanke Chairman Wang Shi had said earlier that the company would gradually reduce its dependence on bank loans and diversify project financing by issuing corporate bonds and seeking loans from foreign institutions. Property analysts said that the keenness of mainland real-estate companies to tap foreign capital has increased substantially in light of the government's efforts to curb bank lending. Furthermore, mainland media reports have said that Vanke is in talks with big property firms including Hong Kong's Sun Hung Kai Properties to set up 50/50 joint ventures to develop projects in the affluent Jiangsu Province next year. The Shenzhen-listed company, which focuses on high-end markets in Shenzhen and Shanghai, posted a 6.4-per-cent rise in third-quarter earnings which stood at 70.35 million yuan (US$8.5 million), as compared with a 12-per-cent increase in the second quarter. In the first nine months of 2004, Vanke increased its total land bank by 8.4 per cent to 8.12 million square metres. |
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