Guangzhou R&F Properties Acquires Malaysia Sites for US$1.4 Bil

Guangzhou R&F Li Sze Lin

Li Sze Lin, Chairman of Guangzhou R&F

Developer Guangzhou R&F Properties has joined the rush of Chinese real estate firms headed overseas by spending RM4.5 billion (US$1.4 billion) to acquire six sites in the southern Malaysian state of Johor Bahru.

The transaction was announced in a statement to the Hong Kong stock exchange today, along with the firm’s plan to build commercial and residential properties as part of its first overseas project. The properties were acquired from the Sultan of Johor, the traditional ruler of the state adjacent to Singapore.

China’s Outbound Real Estate Migration Grows

R&F’s deal is part of a growing trend of China’s cash rich real estate developers picking up what are perceived as bargain assets in other countries. With China’s crop of millionaires and billionaires growing at a record rate and government policies restricting sales of residential real estate at home, many property firms are looking for opportunities to build and sell homes overseas.

Just this past weekend, Shanghai-based Greenland Group sold US$1.5 billion worth of homes in its new project in Sydney, Australia. The firm also has billions of dollars of residential developments in the works for Melbourne, New York and Los Angeles.

Greenland rival Dalian Wanda, owned by China’s richest man, Wang Jianlin, has also acquired developments in London, New York and India, while the country’s largest developer, China Vanke, has a joint venture project in San Francisco with Tishman Speyer, and developments under way in Malaysia and Singapore.

Following Rivals into Malaysia

country garden danga bay

Artist’s rendering of Country Garden Danga Bay

The acquisition in Johor Bahru is not the first by a Chinese developer, as R&F’s deal follows by a few months the successful debut in the state of a project by Guangzhou rival Country Garden.

Country Garden’s Danga Bay project in Johor Bahru reportedly sold more than 6,000 units, valued at a total of RMB 9.1 billion yuan (US$1.49 billion) during the first month after launching sales at the beginning of September.

The sales for that project were said to be more than the annual total for the state in 2012, and the Beijing-based Economic Observer has indicated that Country Garden plans further projects in Johor Bahru, as well as in the Malaysian capital of Kuala Lumpur.

Markets Skeptical

While overseas projects seem to be paying dividends for other Chinese developers, however, R&F’s bold acquisition failed to spark enthusiasm for the company’s stock. Shares in the company fell on the 1.77 percent on the Hong Kong Stock Exchange to finish the day at HK$12.24 per share, on a day when the market’s Hang Seng index climbed .66 percent.