Singapore’s CapitaLand is acquiring two adjacent Guangzhou residential sites totalling 150,000 square metres (1.6 million square feet) for RMB 2.05 billion ($297 million). The purchases are in the Zengcheng District of the city, an up and coming area being targeting by public institutions, multinationals and tech giants like Foxconn.
In announcing the transaction via a press release, dated 14 August, CapitaLand said that up to 1,300 homes will be built on the sites by 2021. The deal is the company’s second purchase of a residential site in China within three months after CapitaLand bought a 32-hectare plot in Chongqing for RMB 5.7 billion during June.
“CapitaLand is pleased to win these two prime residential sites in Guangzhou, a first-tier Chinese city and the economic powerhouse of South China with strong fundamentals. This is our second acquisition in China in less than three months, as we gather momentum in replenishing our land bank,” said Lim Ming Yan, President & Group CEO, CapitaLand Group.
Zengcheng Boomtown Attracts Tech and Others
The Zengcheng area is on the eastern outskirts Guangzhou an hour from the city centre and closer to Dongguan than downtown. With a population that is expected to almost double to 2.1 million in the next two years the district is set to host Guangzhou’s second international airport and the new Guangzhou Education City.
Investment in the area has been heavy since it was formally annexed as a district of the provincial capital in 2014. According to a Xinhua report, 94 projects were signed by the local government in 2017 with a total investment value of RMB 63.5 billion.
In January, Foxconn and Country Garden Holdings purchased two plots in Zengcheng for RMB 3.9 billion. The sites, which are adjacent to each other, are approved for a combined gross floor area of 456,100 square metres, with 80 percent committed to residential. Foxconn is also building a RMB 61 billion display factory in the area. The project, which is set for completion in 2019 and will be the largest single investment in Guangzhou ever, will cover 1.5 square kilometres and attract more than 70 related companies.
CapitaLand on the Move in China
CapitaLand targets five main clusters in China, according to prior statements by the company. These favoured areas include the cities of Shanghai, Hangzhou, Suzhou and Ningbo in eastern China’s Yangtze River Delta, as well as the northern China sweet spot around the cities of Beijing and Tianjin.
In the south, the Singaporean developer looks to Shenzhen, in addition to Guangzhou, while further west it likes the cities of Chengdu, Chongqing and Xi’an. Wuhan, in central China, also is a target for the company.
In 2017, CapitaLand sold a total of 8,479 residential units in China worth RMB 15.4 billion, and as of 30 June Chinese assets accounted for a full 37 percent of the company’s total.
CapitaLand Builds Out Guangzhou Portfolio
Among CapitaLand’s target regions in China, it has taken on a wide range of residential, commercial and hospitality projects in Guangzhou.
Since first entering the city in 2006, CapitaLand’s residential division has taken on the Dolce Vita joint venture in Baiyun district with Hong Kong’s Lai Fung Holdings, and in the city’s Panyu district, CapitaLand has two projects, Città di Mare, and LFIE which is set for completion in 2024. On Datansha Island, CapitaLand expects to complete its La Riva project next year.
Through Ascott Ltd, its wholly-owned serviced apartment subsidiary, the group has five operating residences in Guangzhou and one more to be completed in 2019.
In the commercial sector, CapitaLand Group’s 87,404 square metre CapitalMall Sky+ is located in Guangzhou’s Pearl River New Town, and in late 2017, CapitaLand and CapitaLand Retail China Trust (CRCT) formed a joint venture to acquire Rock Square (乐峰广场), the largest mall in the city’s Haizhu District for RMB 3.3 billion.