HONG KONG: Hong Kong developer Hang Lung Properties said yesterday it hopes to invest up to HK$5 billion in new commercial projects on the mainland, the latest planned move by a Hong Kong builder expanding in the region's cutthroat property market.

Hang Lung had committed 38.3 billion yuan in mainland projects as of middle of 2009, ahead of its target. "The company has no debt and we will add one or two more projects on the mainland by 2010," chairman Ronnie Chan said.

Shares in Hang Lung Property rose 3.6 percent following the announcement.

Hang Lung, which has developed two major shopping complexes in downtown Shanghai, set a target in 2003 to acquire land for 18 commercial projects on the mainland by the end of 2009 at a total cost, including development, of HK$40 billion.

Mainland property prices have rebounded sharply after a deep downturn that began in late 2007.

Home prices in 70 mainland cities climbed 2.8 percent in September from a year earlier, the fastest pace in a year, the National Bureau of Statistics said last week. Property sales in the southern city of Shenzhen reached 475 units on October 11, a record for the year, according to China Securities Journal.

The upsurge is pushing developers to act more quickly.

"For every piece for land, there are about eight to ten developers competing to take over; everyone is afraid to miss the chance," said Simon Lo, director of research at Colliers International.

Hang Lung is among the ranks of competing Hong Kong companies that established operations over 15 years ago in big cities like Beijing and Shanghai, where Hong Kong developers have been responsible for some of the megacity's most ambitious building projects.

Making the competition even more intense, booming mainland-bred developers, such as China Vanke and SOHO China, have raced to map out projects in prime areas of top-tier cities in the country.

Earlier this month, commercial property developer SOHO China said it would pay 4 billion yuan to buy land in Beijing in anticipation of rising valuations.

Mainland and Hong Kong developers alike have advantages in terms of market expansion and brand name penetration.

"Mainland builders understand the market's needs and have better knowledge of land's geographic environment than their Hong Kong rivals," Lo said.

"But Hong Kong builders enjoy good cash flow and have better liquidities, whereas mainland developers are often cash-starved," he added.

In order to fund more projects, mainland developers have scrambled to raise capital in Hong Kong.

Eight mainland developers have recently raised or are planning to raise a combined US$6 billion on the Hong Kong stock market. Shenzhen developer Excellence Real Estate, Guangzhou-based Evergrande Real Estate Group and Yuzhou Properties of Fujian are planning to raise funds on the stock market in coming weeks.

(HK Edition 10/21/2009 page4)