Keppel Corporation unit Keppel Land China has secured a 4.7ha residential site in the Chengdu Tianfu New Area state-level development zone for a total consideration of 889.7 million yuan (S$177.4 million) in a government land tender on Thursday, Keppel announced yesterday after the market closed.
The site will be developed into a residential community with 768 units of high-rise apartments and 96 low-rise units, targeted at home upgraders and expected to be launched in the fourth quarter next year.
Keppel Land China has entered into a cooperation agreement with Chengdu Jin Se Hua Fu Real Estate Development Co, under which Keppel Land China will set up a wholly owned unit, Chengdu Wan Ji Property Development Co, to develop the site.
Chengdu Jin Se Hua Fu will then subscribe for a 70 per cent interest in the new company, subject to it completing the necessary procedures with the authorities for the change in equity interest.
Upon completion of the share transfer, expected in the first quarter next year, the new company will become an associated company of Keppel Corporation.
Based on a 30 per cent stake, Keppel Land China's total development cost for the project is expected to exceed 519 million yuan.
Keppel Land China president Ben Lee said that securing this prime residential site is in line with the company's strategy to expand its presence in the growing Chengdu metropolis, adding that the company's six existing residential projects in Chengdu "have been very well received by the local community". Keppel Land China has launched about 17,800 homes in Chengdu to date, with almost all sold out.
The site is in the central business district of the Tianfu New Area, with access to educational institutions and medical facilities. It is 600m from a metro station, 24km from Chengdu's traditional city centre of Tianfu Square, 17km from Chengdu Shuangliu Airport and 30km from the new Chengdu Airport that will be operational in 2020.
Covering 1,578 sq km, Tianfu New Area has been positioned by the central government as the economic engine for western China, designated as a base for industries such as new materials, energy conservation, biotechnology, IT and high-end equipment manufacturing. Its population of 3.25 million is expected to grow to 5.85 million by 2030.
Keppel said the deal is not expected to have any material impact on its earnings per share and net tangible asset per share for the current financial year.
Keppel shares closed up 5 Singapore cents, or 0.855 per cent, at $5.90 yesterday before the announcement.