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China’s R&F Pays $1.4 Billion for Malaysia Land in Expansion

Guangzhou R&F Properties Co. (2777), a landlord in the southern Chinese city’s business district, will pay 4.5 billion ringgit ($1.4 billion) for six sites in Malaysia from a royal family, marking its first acquisition abroad.

The developer plans to build commercial and residential properties on the 116 acres (47 hectares) in the southern Malaysian state of Johor Bahru, according to a statement to the Hong Kong stock exchange today.

Developers from China are committing billions of dollars to projects around the world, from apartment towers in New York and a new business district in the U.K. to a residential redevelopment in Sydney. Regulatory restrictions at home and concerns that the Chinese property market is overheating have spurred companies to venture overseas for the first time.

“Like other developers, R&F made the move to diversify its investment portfolio outside China as domestic property curbs don’t seem to end soon,” said Alan Jin, a Hong Kong-based property analyst at Mizuho Securities Asia Ltd. “It remains uncertain how much demand is out there.”

R&F will purchase the land from the Sultan of Johor for the development that could have about 3.5 million square meters (37.7 million square feet) of floor area including homes, offices and a hotel, according to the statement.

Shares Decline

R&F shares fell 1.8 percent to HK$12.24 at the close of trading in Hong Kong. The Hang Seng China Enterprises Index (HSCEI), tracking Chinese companies traded in Hong Kong, climbed 0.9 percent, while the Shanghai Stock Exchange Property Index, which tracks 24 developers traded in the city, lost 2.6 percent.

Li Ka-shing, Asia’s richest man, said last week that his companies have slowed land purchases in Hong Kong and China as prices have escalated to a high level.

China’s new home prices rose in November by the most this year, gaining 10.99 percent to 10,758 yuan ($1,766) per square meter (10.76 square feet) from a year earlier, SouFun Holdings Ltd., the nation’s biggest real estate website owner, said on Nov. 30 after a survey of 100 cities.

At least 10 Chinese cities have tightened their property policies in November as local governments face pressure to meet annual home-price targets, according to Centaline Property Agency Ltd., the nation’s biggest real estate brokerage. Three of China’s four major cities -- Shenzhen, Shanghai and Guangzhou -- raised minimum down-payment requirements for second-home mortgages to 70 percent from 60 percent.

‘Growth Potential’

R&F’s entry into Malaysia follows Country Garden Holdings Co. (2007), the developer controlled by China’s richest woman Yang Huiyan, which said last year it will buy prime waterfront land in the southern part of the Southeast Asian nation.

R&F has been exploring opportunities to tap into fast-developing markets overseas to boost its longer-term profitability, Chairman Li Sze Lim said in today’s statement.

“The Malaysian property market has significant growth potential that comes from strong economic fundamentals and demographic factors offering opportunities which the group is well positioned to take advantage of,” he said.

Average Malaysian home values rose 43 percent to a record in the four-and-a-half-years to June, according to government data. Prices in the capital Kuala Lumpur climbed 62 percent to 605,711 ringgit between the start of 2009 and the end of the second quarter this year, while those in Johor climbed 37 percent to 187,644 ringgit, CBRE Group Inc. said.

To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at bcao4@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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