(Corrects story published Aug. 26 to say Hang Lung is investing HK$50 billion in China in first paragraph.)
Aug. 26 (Bloomberg) -- Hang Lung Properties Ltd., the Hong Kong developer that’s investing as much as HK$50 billion ($6.4 billion) building shopping malls in other parts of China, said it’s “financially capable” of doubling that investment.
“We are debt free at the moment and I’m confident we will remain debt free when we finish all our existing projects,” Chairman Ronnie Chan told reporters at the opening of the company’s 171,000-square-meter (1.8 million-square-foot) shopping mall in the eastern Chinese city of Jinan today. Doubling that investment in the next phase “won’t be a problem,” he said.
Hang Lung, Hong Kong’s third-biggest builder by market value, has built four shopping malls outside its home city and is scheduled to open at least four projects in the next three years in the Chinese cities of Shenyang, Wuxi, Tianjin and Dalian. Chan said the company is actively looking to add more developments, declining to identify the locations.
The developer, which has about HK$27 billion in cash, hasn’t bought any land in Hong Kong in at least 10 years and is now shifting its focus to luxury shopping malls in other parts of China, where the economy is growing at a faster pace. Hang Lung typically targets cities with per-capita income of 40,000 yuan for its projects, Chan said today.
The Jinan mall, which cost about 3.5 billion yuan, has a gross yield of about 6 percent in its first year, Chan said. The mall has about 350 stores. The Chinese city has a population of 7 million and its economy grew 13 percent last year, according to government statistics.
Hang Lung’s rental income from China will “almost certainly” overtake that from Hong Kong next year, Chan said. The company owns the Standard Chartered building and Hang Lung Centre in Hong Kong.
The company lost the tender for the management rights to the Queensway Plaza shopping mall in Hong Kong’s Admiralty district, which it has been operating for 30 years, spokesman Kwan Chuk-fai said separately today.
To contact the reporters on this story: Kelvin Wong in Hong Kong at firstname.lastname@example.org
To contact the editors responsible for this story: Andreea Papuc at email@example.com