Bloomberg News

China Vanke to Pay 1 Billion Yuan for Developers

March 21, 2007

China Vanke Co., the country's biggest publicly traded developer, said it will pay 1 billion yuan ($129 million) for stakes in four builders, using takeovers to expand as the government curbs land supply.

The acquisitions will add 4.7 million square feet of development projects, the company said in a statement to the Shenzhen Stock Exchange today. Most of the projects will be in the southern Chinese city of Shenzhen, where Vanke is based.

Property prices in Shenzhen, where Vanke made most of its profit last year, surged 9.9 percent in February, almost double the national average, according to government data. China's government has ordered banks to restrict loans for real estate out of concern that investment is rising too rapidly, creating opportunities for companies such as Vanke that have more financial resources than smaller developers.

Vanke last year paid 1.77 billion yuan for stakes in five developers, adding 29 million square feet of building projects.

China's legislature last week passed a law protecting owners of private property. The law, the first of its kind for China since the 1949 communist revolution, allows people to own and sell assets such as land-use rights for up to 70 years in cities.

Vanke has expanded into 28 Chinese cities, compared with about 10 cities entered by rivals Poly Real Estate Group Co. and Hong Kong-listed Shanghai Forte Land Co., Zhang Luan, an analyst at Haitong Securities Co. in Shanghai, said this week. Poly is China's third-largest listed developer.

Profit for Vanke jumped 68 percent to 2.3 billion yuan last year on rising housing demand in the world's fastest-growing major economy. Sales surged to 16.9 billion yuan from 9.92 billion yuan.

The company's yuan-currency shares rose 1.6 percent to 17.02 yuan in Shenzhen yesterday. The stock's value has almost tripled in the past 12 months.

To contact the reporter on this story: Jianguo Jiang in Shanghai at jjiang@bloomberg.net

To contact the editor responsible for this story: Tom Kohn at tkohn@bloomberg.net


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