A Person Who Asks A Question Is A Fool For Five Minutes, A Person Who Doesn't Is A Fool Forever ... Your position:Home->china news-> Hang Lung gets two pieces of land in mainland China
Hang Lung's purchases, for a total of about five billion yuan (US$733 million), come as other developers are slowly returning to the market after one of the deepest downturns in China's relatively young real-estate market. Earlier this month, developer Shanghai Shimao Commercial Group spent 920 million yuan to acquire a piece of land in the northern coastal city of Qingdao that it plans to develop into a mixed-use property. The acquisition is Shimao's first since January 2008. China Resources Land Ltd., the property arm of Beijing-controlled conglomerate China Resources Holdings, said Tuesday it raised 4.3 billion Hong Kong dollars (US$555 million) in a share placement to fund future land acquisitions. Hang Lung's latest purchases, both from local governments, include a 4.5 billion yuan deal in the northeastern city of Dalian and a 415 million yuan purchase in the eastern city of Wuxi. The Dalian property will be developed into a 223,000-square-meter shopping mall, while the Wuxi site will be added to an adjacent shopping mall already under construction. China's property values have taken a hit as demand for exports slowed and the government moved to cool off the hot sector. Property broker DTZ says office values in Shanghai dropped 30% between the third quarter of last year and the first quarter of this year. Hang Lung's deals are a big bet that even if prices haven't reached a bottom, they are now at an attractive enough level to strike. In recent years, Hang Lung became a favorite of property analysts because of its track record of making timely buys during market dips. The company sat on its hands during a sharp run-up in prices in its home Hong Kong market during the 1990s, allowing it to snap up properties cheaply after a housing collapse in 1997. It stuck to a similar game plan during mainland China's run-up of recent years. After acquiring nine properties between 2005 and 2007, Hang Lung Chairman and Chief Executive Ronnie Chan decided to step on the brakes when prices rose to what he calls 'irrational' levels. 'It was crazy what people were willing to pay,' Mr. Chan said in an interview earlier this year. The company 'has disciplined itself and did not chase expensive land sites in the last peak market,' says Matt Nacard, lead China property analyst for Macquarie Securities. 'Hang Lung is very, very astute, and they've been active in China close to 20 years.' In 1991, Hang Lung became one of the first Hong Kong developers to jump into the mainland Chinese market. It has stuck to a straightforward strategy there: Buy land in the middle of a city from the municipal government and build top-end mixed-use projects to attract global brands looking to tap China's boom. If mainland China were Manhattan, Mr. Chan once wrote his investors, 'We would only purchase land on Fifth Avenue between 42nd Street and 59th Street.' Aaron Fischer, a Hong Kong-based property analyst with CLSA Asia-Pacific Markets, said, 'All the developers tell you they have the best sites, but when you go and visit you can see that Hang Lung really does have the very best sites.' He argues that Hang Lung, even after a 73% rise in its stock price over the past three months, is a safe bet. But most experts caution that because of Hang Lung's narrow focus on high-end retail and mixed-use projects, its deals can't necessarily be read as a sign of a broader pickup in the market. Residential developers and foreign funds, many of whom were leading the charge during the latest bubble, haven't yet jumped back into the fray. 'These are the long-term investors. They're not there for a quick turnaround,' says Greg Penn, senior managing director for investment in greater China for CB Richard Ellis. Until residential developers start to snap up land, he says, overall land-transaction numbers aren't likely to rebound in a meaningful way. Jonathan Cheng 
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