Dragon Land moves into local housing in China
Times | Jul 11, 1998
By: Lu Ning
It will build 1,500 units in Changzhou for
the local Chinese
[SINGAPORE] Mainboard-listed China property developer,
Dragon Land Ltd, officially entered the potentially huge Chinese
local housing market byannouncing its first local housing project
in Changzhou, China.
A preliminary agreement was signed yesterday
between Dragon Land's subsidiary, Second Dragon Development Pte
Ltd, and the Changzhou city government.
Under the agreement, the Singapore company will
build 1,500 units for the local Chinese in an area within the Singapore
Townsville where it has developed luxury condominiums catering mainly
to overseas investors.
The estimated total built-up area will be around 172,500 square
metres with the size of each unit ranging from 100 to 125 sq m in
The total cost of the development is put at approximately
153 million yuan (S$31.7 million). In signing the agreement, Dragon
Land chairman Peh Chin Hua said he expects construction to start
in September, and the project would take about two years to complete.
Mr Peh, a Member of Parliament for Jalan Besar
GRC, said the project financing will come from the proceeds of the
company's initial public offer in February when it raised some $4.3
million, as well as from sales of existing projects and pre-construction
sales of properties to be developed.
Yu Zhen Xin, Changzhou's party secretary, said
the city has no restrictions on sales of housing units before they
are completed. Mr Peh is upbeat about the prospect of developing
housing for the local Chinese as China has started to privatise
He disclosed that his company is negotiating
on "several local housing projects" in a number of "major
cities" in China. "The negotiations are in advanced stages,"
said Mr Peh, who expects to launch them by the end of October.
Dragon Land has invested about $70 million in
property projects in China, and has accumulated a landbank of some
1.7 million sq m in Anxi, Changzhou and Qingdao.
The new local housing development project in
Changzhou is priced at around 1,200 yuan per sq m which, according
to Mr Yu, falls into the lower end of the local housing market.
Although Dragon Land will develop the project
on its own, Mr Yu promised that the city government will help with
marketing and constructing support facilities. He said the demand
is strong as an estimated 200,000 local residents out of a city
population of 850,000 are expected to buy their own homes.
Mr Peh said that local housing projects would
generate a 15 per cent rate of return. The new project would not
have any effect on the company's earnings for the current year.
He also said the company is sticking to its $5.37
million earnings forecast for the whole year. In April, it reported
a $2.3 million after-tax interim loss.