SP SETIA Bhd, the country's biggest property developer, will develop a RM2 billion mixed development project in XiaoShan, Hangzhou City in China, scheduled to begin in the first quarter of 2010. This will be SP Setia's maiden project in China, in a joint venture (JV) with Chinese landowner, Hangzhou Ju Shen Construction Engineering Ltd (HJSCEL).
SP Setia, through its subsidiary Setia (Hangzhou) Development Co Ltd, holds a 55 per cent stake in the JV, while HJSCEL has a 45 per cent stake. Work on the 10ha project will be completed in four phases over five years. It features 11 residential towers, five office blocks, serviced apartments, a four-star hotel, a 300,000 sq ft retail mall and signature shops, said SP Setia president and chief executive officer Tan Sri Liew Kee Sin.
"We are awaiting for approvals from the Chinese authorities. We hope to get them by early 2010 and start Phase 1 of the project immediately," he said after the signing of the JV agreement with HJSCEL in Shah Alam, Selangor, yesterday. The event was witnessed by Housing and Local Government Minister Datuk Kong Cho Ha. "Phase 1 includes commercial properties and service apartments worth RM500 million," Liew said. "We are not looking at borrowings as it is a self-funded project. We are developing the properties on a sell-and-build concept," he added.
However, it will retain the mall to control its tenant mix.The service apartments will be pegged at RM400-RM500 per sq ft, while the commercial properties will go for RM500 per sq ft onwards. "Our first income from this project will come in two years. The project will contribute positively to the future earnings and cash flow of SP Setia. It will also tell the world that we are ready to be an international property player," Liew said.
Liew said SP Setia is in talks with other landowners in China to form JVs, with priority to develop in Hangzhou. He added that the company has a five-year plan to get 30 per cent of its net profit and revenue from overseas projects by 2014, from 2-3 per cent currently. "We will focus on Vietnam and China for the next few years."