State-owned firm to invest $1.56b in Moscow realty
Updated: 2015-11-24 07:56
By Hu Yuanyuan(China Daily)
|
|||||||||||
The tverskoy boulevard in Moscow, Russia, Oct 31, 2015. [Photo/IC] |
China Zhong Jin Yin Di City Development, a State-owned real estate company, is investing 10 billion yuan ($1.56 billion) in the Moscow property market, which it believes has huge potential and can deliver a high return on investment.
The company signed a strategic cooperation framework agreement with Sistema JSFC, the largest conglomerate in Russia, earlier in the year, paving the way for its entry into the market.
Both the companies will jointly bid for a 109-hectare land plot in central Moscow, with total investment expected to reach 2.5 billion yuan, according to Felix Evtushenkov, first vice-president of Sistema JSFC.
"The project is a commercial complex consisting of residences, exhibition centers and commercial facilities and the same will be finished in 10 years," said Evtushenkov.
The investment from Zhong Jin Yin Di City Development is till date the largest investment made in Moscow by a Chinese developer.
The Beijing-based company is the only wholly owned subsidiary of the Beijing Gold Exchange Center, which is mainly controlled by the People's Bank of China for real estate development and urban operations.
Zhong Jin Yin Di City Development also has overseas development projects in Mongolia, Cambodia, Thailand and Malaysia, with a total investment of up to 10 billion yuan ($1.61 billion). It has also invested 80 billion yuan in domestic projects.
According to Zhang Pengfei, chairman of China Zhong Jin Yin Di City Development, the huge demand in Russia and the higher investment returns make the entry into the Russia pretty attractive.
"The gross profit margin is also much higher than in China, where the industry average hovers around 15 percent," said Zhang. He disclosed that the expected investment return of the company's project in Mongolia could be about 70 percent.
Unlike other Chinese developers who focus on Chinese buyers when they expand overseas, Zhang said, China Zhong Jin Yin Di City Development will target local residents.
"Housing demand in Russia largely exceeds the supply and this provides lots of business opportunities for us," Zhang said.
According to Evtushenkov, Sistema developed 2 million square meters of housing last year in Russia, but it was still not enough to meet the market demand.
Liu Zhifeng, head of Beijing Real Estate Association, an industry body, said overseas property investment by Chinese firms may exceed $25 billion this year.
Data provided by international real estate consultancy firm JLL puts outbound property investments by Chinese firms at about $16.5 billion in 2014, a 46 percent growth over the levels seen in 2013.
Unlike the mature markets in Europe such as the United Kingdom and France, Russia is still a comparatively new market and has been increasingly catching the fancy of Chinese investors.
Earlier this year, Russian developer Directsia SOT invited Chinese construction companies to participate in their new projects, with a total investment of $5 billion in the southern Russian city of Krasnodar.
Feng Lun, chairman of real estate major Vantone Group, said during a recent industry conference that: "It is the right time for Chinese property developers to expand overseas. Besides investment into residential and commercial projects, companies can also scout for opportunities in sectors like asset management."
Related Stories
China, Russian e-commerce firms work together 2015-11-07 14:11
China, Russia to restructure trade to tackle slumps 2015-11-11 09:47
China, Russia ink cooperation memorandum on insurance regulation 2015-11-16 16:11
China to step up ties with neighbors 2015-11-17 10:21
China and Russia cooperate on liquefied natural gas project 2015-11-17 16:11
Today's Top News
Fiscal subsidies and contributions can bridge pension fund deficit
Timeline set for 16-country trade pact
At least 27 dead after Islamists seize Mali hotel
Talking the talk
170 taken hostage in Mali, Chinese tourists trapped
China pledges to achieve cuts to greenhouse gases
CGN considers solar power foray in France
Suspected mastermind of Paris attacks died
Hot Topics
Lunar probe , China growth forecasts, Emission rules get tougher, China seen through 'colored lens', International board,
Editor's Picks
Xi just needs to turn up for a grand welcome |
Stepping up |
Rural families still hope for male heirs |
Blue skies over Beijing ... for now |
V-Day parade for 70th WWII anniversary |
Tianjin blasts: Death, damage and bravery |