CapitaLand buys real estate business of HK’s Orient Overseas for S$3.1b

CapitaLand is buying the real estate business of Hong Kong’s Orient Overseas International for about S$3.1 billion in cash.

The move will double CapitaLand’s property portfolio in China, which will now make up 36 per cent of the group’s total assets following the acquisition.

The latest acquisition will expand its portfolio to include seven sites for development in Kunshan, Tianjin and Shanghai.

Shanghai was the first city that CapitaLand invested in when it entered the China market 15 years ago. But CapitaLand feels it is now difficult to acquire land there, especially within the inner city area. So one of the options is the latest deal with Hong Kong’s Orient Overseas International.

Liew Mun Leong, CEO of CapitaLand, said: “This transaction is actually a re-affirmation of our strategy to invest in China long term. We have been there for 15 years, and we see ourselves being there for many more years to come.

“This was an opportunity where we could take a big swing to capture a nice portfolio of seven properties in Shanghai and Tianjin.”

CapitaLand is already behind iconic developments such as its Raffles City projects in various cities including Shanghai and Beijing.

Overall, the S$3.1 billion deal will bring CapitaLand’s investments in China to almost S$10 billion. It will double CapitaLand’s China property portfolio from 1.4 million square metres to 2.8 million square metres. And the China portfolio will make up 36 per cent of the group’s total assets.

“We want to increase our portfolio to 45 per cent of our total business. So obviously there is still a significant percentage of assets that we can invest (in),” said Liew.

CapitaLand said it will fund the acquisition in part by proceeds from the recent IPO of CapitaMalls Asia. The acquisition is expected to be completed by the end of the first quarter.

The developer said it is bullish about the China property market because of the country’s strong economic fundamentals and a real physical demand for residential homes, shopping malls, service apartments and hotels.

Source : Channel NewsAsia – 18 Jan 2010

Join The Discussion

Compare listings