Home / World

Country Garden ventures out with Malaysian firm

By Wang Ying and Hu Yuanyuan | China Daily | Updated: 2011-12-28 08:15

Companies look abroad as nation's housing market under pressure

SHANGHAI/BEIJING - Hong Kong-listed Country Garden Holdings Co Ltd has started to explore the overseas market, setting up a joint venture with a Malaysian property developer.

Analysts said that other ambitious domestic developers might also look abroad as the Chinese housing market continues to contract under the pressure of government curbs.

Country Garden filed a notice with the stock exchange of Hong Kong recently, saying that it would set up a joint venture with Malaysia Land Properties Sdn Bhd (Mayland) to develop property in the Southeast Asian country.

Country Garden will have a 55-percent stake in the venture, with Mayland holding the rest.

The filing said that the JV would be principally engaged in acquiring land use rights in Malaysia, where it would develop residential and ancillary commercial facilities.

A request for comment by the company wasn't available as of China Daily's press time on Tuesday.

According to Chen Sheng, deputy director of the China Index Academy in Shanghai, Country Garden's move was in line with the government's call for more investment in the ASEAN economies.

"Prime property development in these nations offers plentiful opportunity," said Chen.

James Macdonald, head of Savills China research, said that many factors should be considered when developing abroad, including cultural differences, regulations and market characteristics.

"In general, however, Southeast Asian economies have been performing well recently and the demographics and rebalancing of the global economy seem to favor continued growth in Southeast Asia, which is likely to be underpinned" by growth in those nations' property markets, Macdonald said.

"Traditionally, Chinese developers chose the US, Australia and Canada as their overseas destinations. However, more of these companies are moving into southern Europe and Africa," noted Chen.

Chen said that few domestic developers go overseas, and he recalled the failed attempt by Chinese billionaire Huang Nubo to buy land in Iceland. The deal was rejected by Iceland's government.

Insiders who spoke on condition of anonymity said that Hainan Airlines Group was discussing a commercial project in Seoul, while the Shanghai-based Shanghai Industrial Investment (Holding) Co Ltd was said to be considering a mixed-use project in Russia.

Carlby Xie, head of research at Colliers International (Beijing), said that a number of domestic property developers had approached Colliers for advice on overseas expansion. Most of these developers were interested in mixed-use projects instead of residential ones.

The major risk for Chinese developers, Xie said, is a lack of knowledge about local markets and laws, but Chinese developers are pretty strong in cost management.

Overseas projects are another option for domestic developers, with foreign markets perhaps proving less competitive or saturated than domestic markets.

There are also the added benefits in markets like Malaysia of having a large Chinese population. Chinese developers are more likely to be well-known to these potential buyers, said Macdonald.

China Daily

(China Daily 12/28/2011 page15)

Today's Top News

Editor's picks

Most Viewed

Copyright 1995 - . All rights reserved. The content (including but not limited to text, photo, multimedia information, etc) published in this site belongs to China Daily Information Co (CDIC). Without written authorization from CDIC, such content shall not be republished or used in any form. Note: Browsers with 1024*768 or higher resolution are suggested for this site.
License for publishing multimedia online 0108263

Registration Number: 130349