Hang Lung Prop sees 2009 China land target in reach
Hong Kong developer Hang Lung Properties (0101.HK: Quote, Profile, Research, Stock Buzz) has a good chance of meeting its 2009 land acquisition target for commercial projects in China, which seemed in doubt before the financial crisis brought more property to the market, its chairman said on Wednesday.
“We have a good chance to hit the target. We’ve already completed 60 percent of the land acquisitions,” Ronnie Chan told reporters on the sidelines of an industry forum on Wednesday.
“I wouldn’t dare to say that if not for the financial crisis, but now the market is weakening. It actually provides us a good opportunity,” he said.
Hang Lung, which has developed two landmark shopping complexes in downtown Shanghai, set a target in 2003 to acquire land for 18 commercial projects in China by the end of 2009 at a total cost, including development, of 40 billion yuan ($5.86 billion).
It has already acquired land in Tianjin in the north, Shenyang in the northeast and Wuxi in the east.
Chan said the financial crisis would weigh on the firm’s earnings this fiscal year, however.
In the latest fiscal year ended in June 2008, Hang Lung, 51.86 percent owned by Hang Lung Group Ltd (0010.HK: Quote, Profile, Research, Stock Buzz), reported a 107 percent jump in profit to HK$13.6 billion ($1.76 billion), helped in part by the disposal of residential properties in Hong Kong.
Chan said his company would be unable to match that doubling in profit this fiscal year due to weakening market demand.
“We made several billion (Hong Kong dollars) selling residential properties last year. But it’s hard to sell even one apartment this year and we have to rely entirely on rent,” Chan said.
He added, however, that he did not expect a sharp decline in rental income this year as many tenants were bound by leasing contracts of more than three years.
Unlike many developers, Hang Lung holds its properties for long-term capital gains and rental income.
Tags: China Financial