The Chinese real estate market continues to stagnate, leading to a decrease in the willingness of property developers to construct new buildings. Recently, the relevant authorities in Hefei City, Anhui Province, announced their plan to reclaim three pieces of idle land in Overseas Chinese City (Asia), adding to the previous announcement in February by the authorities in Chaohu City to reclaim one piece of idle land in Overseas Chinese City. Combined, Overseas Chinese City is expected to face a loss of nearly 1.1 billion yuan.
According to a report by The Paper on March 11, the Hefei Municipal Bureau of Natural Resources and Planning recently issued a public notice regarding the intention to reclaim and purchase three parcels of idle land at the municipal level, involving JK202105, JK202106, and JK202108 projects owned by Hefei Overseas Chinese City Industrial Development Co., Ltd., a subsidiary of Overseas Chinese City Group Limited. The total purchase price is set at 1.725 billion yuan for a combined land area of 784.17 mu.
The disclosed information reveals that the original planned uses for the land include mixed-use, commercial, cultural, educational, and public service facilities. Among them, parcel JK202105 with an area of 430.34 mu was originally planned for mixed-use commercial and cultural facilities to create a comprehensive community with commercial and cultural amenities; parcel JK202106 is purely commercial-residential with an area of 84.46 mu; and parcel JK202108 with an area of 269.37 mu is planned for residential, kindergarten, town community service facilities, and park green space.
The total original land cost of the three parcels amounts to approximately 2.522 billion yuan, with a market appraisal price of around 2.104 billion yuan. The proposed total purchase price of 1.725 billion yuan represents an 18% decrease from the appraisal price and a more than 30% decrease from the total land cost.
Reports indicate that if the repurchase is completed, Overseas Chinese City will face an estimated loss of approximately 797 million yuan on these three parcels.
According to the Economic Daily, Chaohu Overseas Chinese City Hot Spring Town is also facing a land repurchase situation. On February 13, a public notice issued by the Chaohu Municipal Bureau of Natural Resources and Planning regarding the intention to repurchase and retrieve one parcel of land measuring 488.52 mu in the Chaohu Economic and Technological Development Zone showed a market appraisal price of 707 million yuan and a proposed repurchase price of 596 million yuan.
It was mentioned in the report that back on May 15, 2019, Overseas Chinese City (Asia) fully-owned subsidiary Huaiqiao City Gangya partnered with Hefei Guojia to acquire the land at an approximate total price of 1.13 billion yuan. According to the cooperation agreement signed at that time, taking into account Overseas Chinese City’s 51% ownership, the land cost for the plot had already reached around 576 million yuan, resulting in an expected loss of 272 million yuan based on the repurchase price.
Tianyancha data shows that Overseas Chinese City (Asia) is the sole overseas listed platform of Overseas Chinese City Group, adopting a development model of “comprehensive development + urbanization industry ecosystem investment.” Overseas Chinese City Group Limited is a large central enterprise directly managed by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) of the People’s Republic of China, established in 1985, with its headquarters located in Shenzhen.