Hong Kong developers show little interest in Qianhai zone

Hong Kong developers show little interest in Qianhai zone

Staff Reporter

2013-08-06

Excellence Real Estate Group made its first payment of 6 billion yuan (US$980 million) on July 30 for two plots of lands acquired at the first auction held for the Qianhai special zone in Shenzhen a week earlier. But at the auction on July 26, there were no bids offered by Hong Kong’s major developers, who had been expected to take part. The bids offered by mainland Chinese companies were rather conservative. The prime land will cost the Shenzhen-based Excellence 12.3 billion yuan (US$2 billion) in total — 5.19 billion yuan (US$847 million) for T201-0077 and 7.18 billion yuan (US$1.27 billion) for T201-0075.Both the office of the Shenzhen Qianhai Administration and the participating developers wanted to assess land values in Qianhai through the auction, which borders Hong Kong. But the first auction did not see as much fevered bidding as expected.

Qianhai has been dubbed the engine of Shenzhen’s development for the next decade, which will also be a test for China foraying deeper into the global market. According to the Beijing-based Economic Observer, the number of companies taking part in the bid was lower than expected, with five companies bidding for T201-0077 and six for T201-0075.

The Qianhai office had originally been optimistic about receiving bids from Hong Kong-based companies.

A Hong Kong-based developer said capital was not an issue compared with the mainland developers. They were willing to spend a fortune as long as the conditions were right.

What concerned them was the changing policies and environment on the mainland. Additionally, Hong Kong companies placed more emphasis on running their own operations and sustainable management, while mainland developers prefer a quick turnover, which might damage the operational environment and quality of the Qianhai zone.

Hu Can, an official at the Qianhai administration office, told the paper that the office would release another plot of land on Aug. 16 and put another eight to 10 plots of land up for auction by the end of this year.

Hu added that the office will not release too many plots at one time, since there were many factors to be considered before holding an auction.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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