Foxconn and Country Garden Buy Pair of GZ Sites for $605M to Build Tech Town

The company best known for making your iPhone has partnered with China’s top developer, Country Garden Holdings, to win two plots of land for RMB 3.9 billion ($605 million) in Guangzhou, a first-tier city in southeast China.

Foxconn Technology Group, the world’s largest contract manufacturer of consumer electronics, and Country Garden are taking on the project together with companies belonging to the Guangzhou municipal government. The pair of private enterprises will hold a 75 percent stake in the joint venture, local media reported.

The tie-up between the real estate developer and the electronics maker serves the dual purpose of helping China’s third-largest city by gross domestic product move up the manufacturing value chain, while promoting the construction of a new residential district on the outskirts of the 14-million-person municipality.

Country Garden and Foxconn Help to Develop New GZ District

The two adjacent sites are located in Fenggang Village of Zengcheng, a suburban district bordering the city of Dongguan, north of the high-tech manufacturing hub of Shenzhen. The plots are approved to provide a combined gross floor area of 456,100 square metres (4.9 million square feet), according to government announcements.

About 80 percent of the floor area is earmarked for residential use, and the remainder is for commercial space. The transaction equates to an average price per square metre of approximately RMB 8,500 ($1,321) — slightly more than the RMB 8,340 per square metre that a mixed-use commercial and residential site nearby the metro station in the same district sold for last October.

Build High-Res Screens, Get a Share of a Real Estate Project for Free

The Apple products manufacturer is no stranger to the district, as Foxconn started construction of the world’s largest 8K-resolution display factory there last March. The RMB 61 billion ($8.9 billion) plant is described as the biggest overseas investment project in Guangzhou since China’s economic reforms began in 1978.

The ultra-high-definition 8K technology is at the leading edge of digital television, with four times as many pixels as the increasingly mainstream 4K resolution. Under the terms of the Fenggang Village tender, the winning developer is required to introduce a manufacturer that specialises in 8K technology, with at least one distinguished scientist employed at the project to conduct research.

The developer is also expected to earmark no less than ten percent of the project’s residential space for employees of the manufacturer. The stringent conditions of the tender highlight the municipal government’s willingness to provide financial benefits to manufacturers helping to transform Zengcheng district into a high-tech development zone.

Guangzhou authorities have a habit of attaching unusual stipulations to land sales. Last month, China’s Poly Group won a plot of land for a commercial complex in the city’s Tianhe district for about RMB 1.35 billion ($203 million). The Guangzhou government stipulated that the bidders for the site must be financial “omnimedia” enterprises, defined as companies that specialise in collecting and publishing financial information along with media production.

Poly obtained permission to bid on the plot through a partnership with Southern Finance and Economic Omnimedia Group (SFC), a state-run firm that was said to be China’s only “omnimedia” company when it was formed in November 2016.

Country Garden To Build Tech Towns

The sites involved in Zengcheng’s latest land sale are surrounded by five residential projects from various developers including Country Garden and China Railway Construction Corporation, which are marketing homes at an average price of more than RMB 20,000 ($3,112) per square metre. The sites are located near a metro line that is expected to complete at year-end and are ten kilometres from the nearest shopping mall.

The up-and-coming district has also drawn in a Hong Kong developer, with a mainland subsidiary of New World Development buying a site in Zengcheng’s Changgang Village for RMB 2.09 billion ($314.1 million) late last year to develop a commercial and residential property.

Country Garden, China’s biggest builder by contracted sales, announced in August 2016 that it would invest RMB 100 billion over five years to build several “Tech Towns” — which it defined as “smart and ecological towns featured by new scientific and technological innovation” — around first- and second-tier cities.

Last November, the builder signed a strategic partnership with home appliance maker Midea Group to develop city-industry integration (产城融合) projects, combining business and industry clusters with residential communities.