Mainland interest in Macau picking up

Mainland developer Jiayuan International Group Limited has reached an agreement to acquire two plots in Taipa. For US$449.29 mln ‘in cash’. From local company San Kin Tai Property Development. Delivering, says Jiayuan, a great entrée to Macau whilst enhancing ‘brand influence in the Pearl River Delta Metropolitan Circle’.

Chinese property developer Jiayuan International Group Limited has signed an agreement to acquire two plots of land in Macau for HK$3.51 billion (US$449.29 million) ‘in cash’ from local company San Kin Tai Property Development, according to a company filing with the Hong Kong Stock Exchange.
The agreement, reached on September 6, involves two plots on Avenida Dr. Sun Yat-Sen, which together represent a total area of 5,597 square metres.
The two plots are said to be located at ‘San Chai Village’ in Taipa, with lot TN20 occupying a site area of approximately 2,323 square metres and lot TN24 occupying 3,274 square metres.
According to the release, the land areas are well equipped with nearby infrastructure, public and social amenities, as well as a ‘renowned school network,’ while being surrounded by ‘top-tier hotels and shopping arcades’.
The group purchased the two land plots through Xiangyuan Property Development Limited, an indirect wholly owned subsidiary mainly engaged in property development incorporated in Macau on August 21 of this year.
Meanwhile, San Kin Tai is mainly involved in property investment in Macau, with 40 per cent of the group owned by local businessman William Kwan Wai Lam, who also acts as guarantor for the purchase deal.
The deal is expected to be concluded by November 30 of this year, with another date still able to be agreed upon between the parties.
‘The Group believes that the Acquisition represents an excellent investment opportunity for the Group to establish its presence in the Macau property market and enhances its brand influence in the Pearl River Delta Metropolitan Circle’ the release announced.
Jiayuan International also believes the deal would allow the group to increase its land reserves in the Guangdong-Hong Kong-Macau Bay Area ‘in line with the group’s strategy and commercial criteria for land development’.

Agreement with MSAR
According to the release, the MSAR Government’s urban development plans for the land plots issued in July 2015 indicate the owner would submit the plots to the Macau Government in exchange for the granting of an adjacent 3,826 square metres earmarked for urban land use.
A net site area of 1,771 square metres would also be provided to the Macau Government for public amenities.
The land grant contract for this 3,826 square metres ‘replacement land’ would have an initial concession period of not more than 25 years, renewable for successive terms of not more than 10 years upon the expiry of each concession period.
The release states that on June of this year San Kin Tai submitted a construction plan proposal for a property development project on the replacement land, with the proposed development providing a gross floor area of approximately 60,969 square metres comprising residential units, commercial units and car parks.
As of now, San Kin Tai has not reached an agreement with the Macau Government for the land grant contract of the replacement land, or for the proposed development project, with Jiayuan International believing the land swap would take place around four months after the purchase deal is completed.
The HK$3.51 billion to be paid was reached following preliminary appraisal of the value of the two land plots by an independent property evaluator, current property prices in the nearby area, and the estimated value the properties to be developed on the replacement land.
The Chinese group stated in the release that ‘the recent recovering gambling industry in Macau is a favourable factor in the short or medium term,’ with Jiayuan International believing the local economy will benefit from Chinese Government support under the ‘Belt and Road’ initiative.
‘It is believed that the Mainland and overseas investors’ increasing investment sentiment in respect of the Macau property market will also drive up the demand for Macau properties,’ the release concluded.

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Pak Man Hong Kuok Wa Development Ltd.
Local property investor and businessman William Kwan Wai Lam is an executive of local real estate developer Sun Kian Ip Group, headed by Ng Lap Seng - the local developer that was convicted in July by a New York City federal court of six charges of bribery, money-laundering and corruption.
The group is involved in development projects in Mainland China and in Macau, such as Windsor Arch - a luxury residential project near the Macau Jockey Club in Taipa.
Mr. Kwan’s company - Pak Man Hong Kuok Wa Development Ltd. - is also involved in the MOP20 million revamp project of the Capitol Theatre cinema.
The property developer is currently running for this year’s Legislative Assembly (AL) elections as part of the New Union for Macau’s Development list, led by SJM Holdings’ Executive Director Angela Leong On Kei.

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Jiayuan International Group Ltd.
According to Jiayuan International Group Limited’s most recent interim results, as of June 30 of this year, reveal the group’s property portfolio comprises 29 properties in various major cities in Mainland China, with a land reserve of more than 6.88 million square metres located in most of the major cities of Jiangsu Province.
The group stated in a filing that it was planning a ‘continuous expansion in the Yangtze River Delta Region,’ while continuing to invest in the Pearl River Delta Metropolitan Circle.
As of June 30 this year, the group registered RMB522.04 million (MOP646.92 million/US$80.39 million) in profit, with its revenues for the period having increased by 36.6 per cent year-on-year to RMB2.90 billion.