Vanke to build condos for China's rich in Singapore
http://www.businesstimes.com.sg/spec...apore-20131107
Published November 07, 2013
Vanke to build condos for China's rich in Singapore
[SINGAPORE] Faced with curbs on luxury residences and fundraising at home, China's biggest mainland-listed property developer is building apartments for wealthy Chinese in Singapore and raising debt in the city's currency.
China Vanke Co, which also plans developments in San Francisco and Hong Kong, sold S$140 million of four-year notes with a 3.275 per cent coupon on Oct 31, according to Bloomberg data.
That's a premium on the average 1.8 per cent coupon for Chinese bonds in the currency. The yield on the company's five-year US dollar bonds fell 54 basis points since June, to 4.14 per cent on Nov 5.
Vanke has teamed up with Keppel Land for the development of 726 flats in east Singapore as foreign Chinese buyers have emerged as the top overseas buyers of residential property in the city-state this year.
Mainland builders are accelerating projects abroad as people from the world's most-populous country seek access to education, healthcare and citizenship abroad, said London-based broker Savills plc.
"Chinese developers have been looking offshore for funding for many years now but there's more impetus to do it now after the government turned the credit taps off," said James Macdonald, Shanghai-based head of research at Savills China. "Being able to turn to overseas bond markets is important to Chinese developers as these markets are not tied to government policy and prices are dictated by the market."
Regulators across China have sought to clamp down on property prices, tightening lending requirements and boosting minimum downpayments for additional home purchases in an effort to reduce the risk of a bubble destabilising the financial system.
The People's Bank of China in June engineered a cash crunch that saw short-term funding rates soar amid efforts to curb loose lending practices that have undermined bank balance sheets.
The yield on the government's benchmark 10-year bonds added three basis points to 4.22 per cent and has jumped 64 basis points this year. The yuan, which gained 2 per cent so far in 2013, was little changed at 6.0968 per dollar.
"Overseas markets are attractive as there is less government interference and stronger rule of law, which makes them more transparent and predictable," said Mr Macdonald, adding that currency diversification is another driving factor behind investment abroad.
Dalian Wanda Group Corp, founded by China's richest man Wang Jianlin, is constructing a luxury hotel and apartment building in England. Its unit, Dalian Wanda Commercial Properties Co, is considering selling a US dollar bond and met investors in London this week, according to people familiar with the matter.
Chinese and Hong Kong developers have sold close to US$20 billion of debt in dollars this year, making up about 17 per cent of the market in Asia outside Japan. This compares to 11.2 per cent last year.
Vanke is targeting foreign markets where Chinese buyers are active, including San Francisco, New York, Boston and Singapore, president Yu Liang said in August.
The move comes as the authorities in its home town of Shenzhen boosted minimum downpayments for second homes to 70 per cent and reiterated a ban on loans for anyone who owns two or more properties.
Borrowing costs for companies in Singapore dollars reached a four-month low of 3.087 per cent on Oct 30, according to HSBC Holdings plc indexes. - Bloomberg
