Country Garden hits pause button after China scrutiny
Developer is delaying investing in countries such as India
SHANGHAI: Country Garden Holdings Co says it’s hitting the pause button on an international expansion amid Chinese government scrutiny of property acquisitions abroad, and is delaying investing in countries such as India.
“Now that the government is limiting overseas real estate investments, we’ll take a pause,” chief strategy officer and vice-president Jeff Lin said in an interview in Shanghai.
Border tensions with India hadn’t helped prospects in that country, he said.
Country Garden is gauging the Chinese government’s stance after dealmakers such as Dalian Wanda Group Co and Anbang Insurance Group Co attracted scrutiny for their overseas acquisitions and the authorities rolled out tighter rules for purchases abroad.
Five years into an international expansion, the developer has looked at the US, UK, Thailand, Vietnam and India after expanding into Malaysia, Indonesia, Australia and Hong Kong.
“We were exploring six cities in India this year,” Lin said. “But we’ll slow them down now, because we’d still like to gauge the government’s policies on overseas investments.”
The company’s shares sank in Hong Kong yesterday, falling as much 8.5%, the biggest intraday decline in 18 months, after eight Chinese cities rolled out extra tightening measures including curbs on reselling homes within two to three years of purchase.
Known for building a US$100bil city on four artificial islands in Johor Bahru, Country Garden is controlled by one of China’s richest women, Yang Huiyan.
The firm is No. 2 in China for contracted sales in the year through August, according to China Real Estate Information Corp, and its shares have more than tripled in Hong Kong this year as investors bet on the biggest developers in a consolidating industry.
The Foshan-based developer pulled some Chinese executives from India, leaving their local Indian colleagues to handle the work, according to Lin, who also cited safety concerns in what’s been a tense time between the two nations, which are sparring over territory in a remote area of the Himalayas.
While Country Garden pressed ahead with a HK$2.44bil (US$313mil) investment for a residential site in Hong Kong this month, Lin said that overall the pace of the firm’s international expansion was “slowing.”
Asked about a Mint report this month that Country Garden was in talks to buy a majority stake in a Wadhwa Group residential township in Mumbai, Lin said only that talks with overseas partners would continue but any decisions would be made “more prudently.”
While investments for President Xi Jinping’s “One Belt, One Road” trade and infrastructure push are an exception to Aug 18 restrictions on overseas investment, India isn’t part of that initiative.
China and India ended a monthslong military face-off in late August before leaders of both countries attended a summit of Brazil, Russia, India, China and South Africa in Xiamen.