CapitaLand acquires 32-hectare prime mixed-use site in Chongqing for RMB5.7 billion
Acquisition will add over 2,100 units to the Group’s residential pipeline and double its retail network in fast-growing Chongqing
Singapore, 27 June 2018 – Marking a significant move that will boost its residential pipeline in China by over 2,100 units, CapitaLand has acquired all the shares in a company that owns a 32-hectare prime mixed-use site in Chongqing – gateway to China’s fast-growing western region. Cash consideration payable is RMB2.2 billion (about S$459 million), which takes into account the agreed value of the property at RMB5.7 billion (about S$1.19 billion). The sprawling land parcel comprises two greenfield sites that will yield 1,900 residential units and a shopping mall with a combined gross floor area (GFA), excluding car park, of 335,000 square metres (sq m) when fully developed by 2022; as well as brownfield sites with an inventory of 223 residential units and 100,000 sq m of office and retail space that are completed or soon-to-be-completed.
The land parcel is located in Xinpaifang, a mature residential and commercial zone in Liangjiang New Area, the first national-level development area in inland China and a part of Chongqing’s Free Trade Zone. It is a mere 20-minute drive from Jiangbei International Airport and a short distance from Guanyinqiao Central Business District (CBD) as well as Jiefangbei CBD, which is next to Raffles City Chongqing. The site enjoys excellent connectivity and is directly connected to Sports Park metro station, which serves three lines. Surrounded by high-end residential developments and government offices and near parks, schools, medical facilities and shopping malls, the land parcel is part of a well-established residential area with a high-income population of about 600,000 people within a three-kilometre radius.
Mr Lim Ming Yan, President & Group CEO of CapitaLand Group, said: “Given its significant scale, strategic location and excellent connectivity, the land parcel in Chongqing’s Xinpaifang is a prized acquisition that will boost CapitaLand’s land bank in a key gateway city in the South Western region of China. This latest acquisition rides on the strong sales momentum for the residential component of Raffles City Chongqing – CapitaLand’s largest and most complex integrated development opening in phases from next year – which has sold 90% of the 500 apartments launched to date. By leveraging our Group’s best-in-class design and development capabilities, we are confident of transforming the site into yet another vibrant and iconic mixed-use development that meets the evolving aspirations and needs of Chinese consumers.”
Mr Lim added: “Through our ‘core city clusters, dominant assets’ strategy, we have steadily ramped up our network in China’s first- and second-tier cities, cementing our lead as the foreign real estate developer with the largest portfolio of integrated developments. In line with our disciplined investment strategy to augment our land bank on a sustainable basis, we will continue to explore and evaluate prime sites and opportunities to expand our portfolio in fast-growing Chinese cities.”
Mr Lucas Loh, CEO of CapitaLand China, said: “Chongqing is one of China’s fastest growing cities with strong investment potential. The city’s growing population and rising income per capita have generated demand not only for residential properties but also premium retail and office spaces in central locations. Relative to other Chinese cities, Chongqing’s property market has been more stable, thanks to the municipal government’s proactive efforts to moderate market supply and demand. Given the favourable market conditions, coupled with the attractive attributes of our new site in Xinpaifang, we are optimistic about the demand for our upcoming residential launches in Chongqing.”
Mr Loh added: “This acquisition is also timely, and we expect to recognise gains from sales of the soon-to-be-completed residential units upon handover, which could be as early as the second half of this year. In addition, our proposed new mall in Xinpaifang will complement the 230,000-sq m mall in Raffles City Chongqing and double our retail network in the city, serving to expand our recurring fee income base as we continue to grow our business.”
In 2017, Chongqing’s annual GDP grew 9.3%, outpacing the national average of 6.9%. The city’s fortunes are set to rise further with a raft of economic initiatives in its favour, such as the Belt and Road Initiative and Yangtze River Economic Belt promotional plans. Chongqing is also the host city for Chongqing Connectivity Initiative, the third Government-to-Government collaboration between Singapore and China which Raffles City Chongqing is a part of.
Occupying 9.2 hectares of site area, Raffles City Chongqing brings together a 230,000-sq m shopping mall, 160,000-sq m of Grade A office space, 1,400 residential apartments, Ascott Raffles City Chongqing serviced residence and a luxury hotel – with a total construction floor area of 1.12 million sq m and GFA (excluding car park) of about 817,000 sq m. The development is strategically located on Chaotianmen at the confluence of Yangtze and Jialing rivers in Yuzhong District, next to Jiefangbei CBD.
Through its wholly owned serviced residence arm The Ascott Limited, CapitaLand also manages seven other serviced residences in Chongqing, namely Somerset Jiefangbei Chongqing, Somerset Yangtze River Chongqing, Tujia Somerset Palm Springs Chongqing Serviced Residence and Tujia Somerset Garden City Chongqing Serviced Residence that are operational, as well as Ascott Nanbin Chongqing, Citadines Taoyuanju Chongqing and Citadines Gaoke Liangjiang Chongqing that are slated to open later this year.
As at end March 2018, China accounted for 37% of CapitaLand Group’s total assets. Over 1,300 residential units were handed over to home buyers in 1Q 2018. As at 31 March 2018, the Group had over 8,000 residential units valued at RMB15.1 billion which had been sold but not yet handed over. About 70% of this value is expected to be recognised by the end of this year.