12-1-13 11:46 PM EST | Email Article
   By Esther Fung 
 

SHANGHAI--Guangzhou R&F Properties Co. (2777.HK) has agreed to acquire six parcels of land in Malaysia for 4.5 billion ringgit ($1.39 billion), becoming the latest Chinese property developer to expand abroad.

The property developer plans to build commercial and residential property on the freehold land, which covers approximately 116 acres in Johor Bahru, south of West Malaysia, it said in a statement on the Hong Kong Stock Exchange website Monday. It plans to develop high-rise apartments, low density housing, offices, a hotel and a shopping mall in phases. These properties have an estimated saleable floor area of 3.5 million square meters.

Guangzhou R&F's interest in Malaysia comes after Chinese developer Country Garden Holdings (2007.HK), which invested in Malaysia in 2012, reported brisk sales in its waterfront residential project Danga Bay in Johor Bahru after its launch in August, with many buyers coming from China.

Guangzhou R&F said it has been exploring opportunities to expand abroad "to tap into fast-developing market overseas and to add momentum to the growth of the group. Malaysia, with a sizable Chinese community and favourable government policy attracting foreign purchasers, is well-suited for the first venture of the group outside (China)."

"The Malaysian property market has significant growth potential that comes from strong economic fundamentals and demographic factor[s]," it said in the statement

Guangzhou R&F added that it would pay for the land over a period of three years in four installments.

This year, Chinese property developers have been aggressive in buying land and property projects overseas as they look to tap demand from their Chinese customers. Many Chinese nationals are looking for a home address abroad, driven by domestic limits on home purchases as well as the stronger yuan, higher investment returns, asset diversification or migration purposes.

"Chinese property developers' highly publicized overseas forays this year are opportunistic, and not symptomatic of a gradual diversification away from China. The overseas projects, despite their large headline sales numbers, remain very small relative to the scale of the companies' onshore operations, particularly when it comes to profitability," said Fitch Ratings in a recent note.

Guangzhou R&F's move to venture outside mainland China follow Greenland Holding Group's investments in the New York, L.A., Jeju Island in South Korea and Sydney, Dalian Wanda Group's project in London and China Vanke's expansion in San Francisco, Hong Kong and Singapore.

 

Write to Esther Fung at esther.fung@wsj.com

 

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(END) Dow Jones Newswires

December 01, 2013 23:46 ET (04:46 GMT)

Copyright (c) 2013 Dow Jones & Company, Inc.
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