China Vanke Co. (200002), the country's largest listed property developer, and China Aviation Industry Corp. I, the nation's biggest aircraft-maker, agreed to set up a 1 billion yuan ($129 million) property development venture in Beijing.
Vanke will own 40 percent of the venture, while a unit of AVIC I, as the Beijing-based company is known, will control 60 percent, Vanke said in a statement to the Shenzhen Stock Exchange.
China's real estate developers are trying to raise capital and are seeking government ties as the country tries to rein in property prices, which have more than doubled since 2000. The government has imposed taxes and raised lending rates, adding costs for real estate developers including Vanke.
``Vanke is seeking large-scale production in property development,'' said Zhang Luan, an analyst at Haitong Securities Co. in Shanghai. ``The central government-backed AVIC I may help the joint venture obtain land in Beijing easily.''
Vanke, which owns 1 percent of China's real estate development market, acquired three companies last year, boosting its reserves by half to 15 million square meters.
The Shenzhen-based developer sold more than 3 million square meters of property last year for sales of more than 20 billion yuan, it said in a stock exchange filing on Jan. 12. This compares with sales of 9.9 billion yuan in 2005. The company's 2006 profit jumped between 50 percent and 65 percent from the previous year, Vanke said on Jan. 12.
China's urban real estate prices rose 5.5 percent in 2006 from a year earlier, according to a National Development and Reform Commission's survey of 70 cities.
Beijing and Shenzhen, where AVIC I and Vanke are based, are among the cities that reported the fastest home price growth, according to the survey. Average home prices in Beijing rose 10.4 percent in December from a year earlier, while Shenzhen's new housing price increased 10 percent.
Vanke's yuan-denominated shares fell 0.3 percent to close at 15.32 yuan in Shenzhen. They have almost tripled over the past 12 months.
To contact the reporters on this story: Jianguo Jiang in Shanghai at firstname.lastname@example.org Irene Shen in Shanghai at email@example.com
To contact the editor responsible for this story: Tom Kohn at firstname.lastname@example.org Bret Okeson at email@example.com