Property veteran plans giant mixed-use project in China

An artist’s impression of all three phases of the completed township in Yinchuan, the capital of Ningxia autonomous region in China’s north-west. Once completed, it will have residential, commercial, retail and hotel components on a site of 1.33 mill

REAL estate veteran Han Cheng Fong is embarking on another giant mixed-use project in China.

The former chief executive of DBS Land and Fraser & Neave is venturing into a third-tier city in Ningxia autonomous region in the north-west to build the first phase of a township on a 320,000 sq m plot.

He told a briefing yesterday that this phase is expected to yield 2,200 homes - apartments, terraced houses and bungalows - and 88,000 sq m of commercial space.

There are three phases planned for the township in Yinchuan, the capital of Ningxia.

Once completed, it will have residential, commercial, retail and hotel components on a site of 1.33 million sq m in size - almost twice as large as the Jurong Gateway precinct.

Dr Han, 70, said construction for the first phase is expected to start at the year end, with sales scheduled to begin in March next year. Completion is expected by the end of 2014.

He expects to price the homes - which have sizes ranging from 80 sq m to 350 sq m, or from 860 sq ft to 3,770 sq ft - at between 4,500 yuan (S$880) and 5,000 yuan per sq m, while the shop space is expected to go for 6,000 yuan to 7,000 yuan per sq m. This works out to an expected market value of more than 2 billion yuan for the first phase of the project.

Gross margins are expected to be in the region of 30 per cent to 40 per cent, and the buyers are likely to be locals.

The site will be developed by Brilliance International Investment - a company Dr Han jointly owns with a Hong Kong-based Chinese developer - as well as Si Chuan Zhong Tuo Property Holding and Chang He Investment.

"This is quite far away from the normal haunts of big Singapore developers... We don't have the firepower they have, so we small players have to be contented to seek out our little place in the sun in the more distant provinces and third-tier cities," he said.

In October last year, Dr Han announced plans for a mixed-use project in Chengdu with an estimated market value of between 1.35 billion yuan and 1.5 billion yuan.

But design changes have pushed back the sale of the office and shop units by six months, with sales now expected to start at the year end.

While Dr Han acknowledged the risks involved in embarking on such a large-scale project, he noted that signs of a recovery in China's residential prices suggest that this might be an opportune time to enter the market.

"It's not all hunky dory that I will be successful... It's not without risk; there are market and policy risks, so hopefully I don't lose a sizeable chunk of my savings," he added.

"But time will tell, probably in about a year's time, the first results will start to flow in... But if it fails, I don't think it will sink me."

With two developments now on the go, Dr Han said there are no plans to embark on new projects, but his ambitions have not dimmed.

"I have a burning desire to prove to myself that without the finances and trappings of big corporations, I can still kick-start a business in real estate and meet the challenges to turn it into a modest success," Dr Han said.