Commercial & Industrial Property News Update

China - IOI Corp Ready To Begin RMB 4 billion Mixed-use Project


November 1, 2012

After the purchase of RMB 1.2 billion worth of land, Malaysian developer IOI Corp Bhd will embark on the development of an RMB 4 billion mixed-use development in Xiamen.


Beginning next year, an independent mixed-use property project will take shape in Xiamen, eventually encompassing retail, hospitality, office and residential components.



 

The project will be undertaken by Malaysian developer IOI Corp Bhd, which has recently completed a land acquisition deal worth RMB 1.2 billion.

According to group executive chairman Tan Sri Datuk Lee Shin Cheng, the massive development will be completed over 10 years.

“The first phase will be a four million square feet development of a shopping mall, hotel, offices and residential units and is expected to be completed in two years' time,” said Lee at a press conference held on Monday.

“We will hold the mall, hotel and offices for long-term investment purposes while the residences will be sold off. We have been studying the market in China in the past three years and we think this will be a very viable source of revenue for the group,” he said.

Simultaneously, IOI Corp will also proceed with a joint-venture with a Taiwanese company for the development of a commercial-cum-residential project in Xiamen. Construction has already started on the 900,000 sq ft property which will occupy a 7.7-acre high-rise mixed development plot. The joint-venture project will be completed in the next two years.

Property research firms have maintained a neutral view of IOI's Xiamen projects.

Kenanga Research noted that although the RMB 4 billion project will contribute positively to the group's earnings, significant contribution is not expected until after 2015.

Hong Leong Investment Bank noted that China's near-term economic uncertainties offset recent signs of warming in China's real estate sales and land transactions.

“It also remains to be seen if the property policy tightening in China will remain post the leadership transition next month.

“Nevertheless, we have taken comfort that IOI Corp will have not an issue in funding the project, given its net debt and net gearing of RM 3.8 billion and 0.3x, respectively,” it added.

Tags: Commercial real estate, Shop for rent, Office for lease

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