Mainland homebuilder China Evergrande Group is doubling down on western China by buying a 320,000 square metre office, retail, and residential project in Chongqing as part of a RMB 3.29 billion ($498 million) deal. The transaction comes just over two years after the company paid $903 million for a mixed-use project in the same city.
Evergrande, ranked last year as China’s biggest residential developer by sales, is picking up the development in the city’s core business district of Jiefangbei from Chongqing-based Ying Li International Real Estate. The under-construction project, Ying Li International Commercial Centre (ICC), will include two office tower blocks and a six-storey shopping mall.
Under the terms of the deal, Evergrande subsidiary Shengyu (BVI) Limited will pay RMB 2.77 billion for the project itself while buying RMB 514.7 million of land tender deposits from Singapore-listed Ying Li, according to an announcement this week. As part of the same transaction, Ying Li agreed to spend RMB 520 million to complete the acquisition of a separate land parcel in Chongqing that will be transferred to Shengyu.
Evergrande Builds Western China Presence
Ying Li started construction on ICC, then called Ying Li Financial Street, in mid-2013 after picking up two adjacent parcels comprising the development site in 2010 and 2011, respectively. The project has commenced pre-sales registration, and phase one is slated for completion in 2018, followed by phase two in 2020, according to the company’s most recent quarterly report.
The project, which sits on two land parcels totalling about 18,400 square metres, also includes what Ying Li calls a residential “high-end luxury SOHO Tower.” The prime downtown address within the city’s Yuzhong district is surrounded by skyscrapers and shopping malls.
Guangdong-based Evergrande previously took a major bet on Chongqing in October 2015, when the developer chaired by Xu Jiayin spent HK$7 billion to acquire a mixed-use residential and commercial project in Jiangbei district from a consortium of Hong Kong property firms.
Known as “The Coronation,” the project adjacent to the Guanyinqiao commercial area has a planned gross floor area of 1.38 million square metres, including 850,000 square metres of residential properties.
The deal came amid a steak of acquisitions in second-tier cities by Evergrande, which included paying HK$6.5 billion ($839 million) to scoop up three development projects in Chengdu, capital of western China’s Sichuan province, from a unit of Chinese Estates in July of the same year.
Local Developer Cashes In
Formed in 1993, Ying Li has built a portfolio of residential and commercial properties in the sprawling Chongqing municipality including the 58-storey Yingli International Finance Centre (IFC) skyscraper, also located in Jiefangbei district.
Fang Ming, the company’s executive chairman and CEO, stated that the sale of ICC – one of Ying Li’s three pipeline projects in the city – would free up capital to be recycled into other ventures.
“With this divestment, we will be able to strengthen our financial position and redeploy our capital to other fast turnaround projects with shorter completion cycle as we continue to seize opportunities in PRC where we believe the growth will remain strong,” commented Fang in a statement.
In addition to ICC, Ying Li is currently developing the Ying Li International Hardware and Electrical Centre (IEC) – a 1.32 million square metre hub for hardware and electrical vendors in Chongqing’s Jiangjin district – along with a high-end residential project in the city. Also in the pipeline is a 750,000 square metre mixed-use complex in Beijing.