SINGAPORE: Southeast Asia's largest property developer CapitaLand on Friday will pay S$360 million ($288.8 million) for a 40 percent stake in a company that will help it get deals to build more low-cost housing in China.
Surbana, the former building and development division of Singapore's Housing and Development Board (HDB), has to-date sold almost 12,000 units in China and has deals to help build another 41,000 more. CapitaLand purchased the Surbana stake from Singapore state investor Temasek. Temasek owns about 40 percent of CapitaLand.
CapitaLand, which in the past has focused more on mid- to high-end housing in China, is broadening its focus and stepping up its efforts to provide more affordable housing to the millions of people migrating to the cities from rural areas.
China plans to build 36 million units of low-cost housing over the next five years to placate citizens angry that property speculation has priced them out of the non-subsidised housing market.
Through the deal, CapitaLand will be able to tap on Surbana's expertise in designing housing for low-cost housing and help it to expand in China's fast-growing market, said CapitaLand Chief Executive Liew Mun Leong.
Together with Surbana's four township developments in China, CapitaLand will have a total residential pipeline of more than 64,000 units in the country.
"Surbana's townships are located mainly in tier-2 cities, where we see tremendous growth opportunities and potential supported by rapid urbanisation and rising level of income," Liew said.
Concerns over China's measures to curb rising property prices have also given Chinese companies the impetus to develop more low-cost housing.
"The policy pressures became a catalyst for us to move forward," Liew added.
CapitaLand, which also owns shopping malls and commercial assets in China, aims to have about 45 percent of its total assets from the mainland, up from 36 percent now, he said.
HDB is the government agency behind Singapore's successful housing programme. Today, about 85 percent of Singapore's 5 million people live in the apartments built by HDB.
Capitaland said JPMorgan was the financial advisor for the deal.
Comments
Comments are closed for this article.