The booth of Evergrande Real Estate Group Ltd at a property expo in Guangzhou, capital of Guangdong province. (LIU JIAO/FOR CHINA DAILY)
Mainland realty giant takes over four projects from subsidiary of Hong Kong's New World Development
Evergrande Real Estate Group Ltd has revealed what it claims to be the Chinese mainland's largest ever single real estate acquisition, after agreeing to take over $2.1 billion worth of property projects from New World China Land Ltd, a subsidiary of Hong Kong's New World Development.
There are four projects involved in the deal: High-end residential sites in Haikou, the capital of Hainan province, Huiyang in Guangdong province, and two sites in Hubei province's Wuhan, close to the city's central business district.
Evergrande has made a downpayment of 3.15 billion yuan ($492 million), or a fifth of the total gross price, with the rest due to be paid off in installments over the next two years.
The country's second-largest developer by sales said the deal illustrated the deepening mutual trust between leading enterprises in the Hong Kong and mainland property sectors.
Evergrande has been on a shopping spree this year, having spent more than 40 billion yuan on 10 projects, mainly from Hong Kong-owned firms.
That list includes the 10.2 billion yuan acquisition of HK's Mass Mutual Tower－its most expensive office building transaction ever recorded in the city.
Last month it also launched an ambitious plan to expand into the insurance sector, after taking a 50 percent stake worth $617 million in Great Eastern Life Assurance (China) Co Ltd－a Chongqing-based joint venture originally formed between the local government and Singapore.
Other acquisitions have included targets in the bottled water, sports, medicine and cultural sectors.
Evergrande last month raised its 2015 sales target by 20 percent, after a recovery in its residential sales.
Xie Yifeng, the president of the Realty Association of Asia-Pacific Cities, said Evergrande's latest purchase illustrates long-term confidence in China's real estate investment market.
He forecasts the company, and other mainland property giants, are likely to intensify their buying spree by targeting more HK-owned properties, both in China and overseas.
New World Development is controlled by Hong Kong billionaire Cheng Yu-tung.
It has been hit by poor sales in China in recent years which have affected revenue and core earnings so far this year.
Henry Cheng Kar-shun, New World China Land's managing director, said the $2 billion disposal would optimize the group's project development and investment portfolio by scaling down its investments in second- and third-tier cities, where gross profit margins have fallen.
He said the group would now focus more resources into first-tier cities, and mid-sized property projects.
