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Sunac China Holdings has bought two sites in Beijing and Shanghai

Last Updated: Thursday, January 24, 2019 - 16:58

Sunac China Holdings, one of the country’s biggest property developers, has bought two sites in Beijing and Shanghai worth 12.5 billion yuan (US$1.83 billion), it said on Monday.

Sunac Real Estate, a subsidiary, has acquired a 100 per cent stake in Oceanwide Construction Holdings, a property unit of Shenzhen-listed developer Oceanside Holdings that owns the land. The site in Beijing, with a gross floor area of 668,500 square metres, is located in Chaoyang district, home to most foreign embassies and a number of blue-chip foreign companies such as IBM and Swire Group. The Shanghai site has a gross floor area of 628,000 square metres and overlooks the Huangpu River in the South Bund district. Both plots are for residential and commercial development.

The deal shows mainland China developers are “recovering confidence” on the back of recent easing by Beijing, said Raymond Cheng, head of Hong Kong and China research at Singapore-based investment holding company CGS-CIMB Securities. Such a “big move” also points to healthy balance sheets at top Chinese developers, he added. Sunac China, the country’s fifth largest developer by sales in 2018, said the acquisition will increase its market share in the “core locations of Beijing and Shanghai”, further strengthening its leading position and brand influence in the tier 1 cities.
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Beijing cut banks’ reserve requirement ratios by a full percentage point on January 4, in an attempt to stimulate the economy. And though the move is not expected to ease credit restrictions imposed on the property sector, it could help developers with liquidity. “We are close to a nationwide property market easing, but we are not quite there yet,” said Lu Ting, chief China economist at Japanese financial holding company Nomura Holdings. “We believe we will need to wait for another two quarters before major nationwide property easing measures, including scraping price controls and easing restrictions on home purchases, especially in tier 1 and 2 cities, are introduced.” Beijing relaxes caps on home prices partially as unsold flats in the capital city rise.

Meanwhile, property policy relaxation has been reported in some cities recently. Last week, two sites in Beijing went on sale without a cap on their selling price, in a policy shift that began late last year to generate demand for apartments during the market slump. Unlike sales over the previous two years, the government did not dictate the prices for the apartments that will be developed on these sites. The prices of new homes in China grew at their slowest pace in eight months in December, as government restrictions targeting speculation dampened sentiment amid a slowing economy.

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