Chinese Real Estate developer boosts Investor confidence in SA

 The outcome of the R1 billion property deal between chemicals and explosives company AECI and the Chinese property firm Shanghai Zendai, has boosted investor confidence in South Africa’s commercial property sector.

SA Commercial Prop News has learnt that Chinese Real Estate developer Shanghai Zendai Property (0755.HK) agreed to purchase land in South Africa for over R1 billion from AECI (AFE).

The Johannesburg property which AECI has owned since 1886, includes approximately 1,600 hectares (3,950 acres) of land and buildings in Modderfontein near the city’s main domestic and international airport,

The area, currently used for manufacturing, is about 15 kilometers (9 miles) east of Sandton, the city’s main financial center, and the same distance west of OR Tambo International Airport, Africa’s biggest airport.

The company, based in Hong Kong plans to build a financial hub with residential, commercial, light industrial and retail components. It plans to invest a further R80 billion over 10 to 15 years and aims to create tens of thousands of jobs in the process.

“It will become the future capital of the whole of Africa,” Chairman Dai Zhikang said at a press conference yesterday, speaking through a translator. “This will be on par with cities like New York in America or Hong Kong in the Far East.”

AECI has been trying to sell the land for nearly two years, saying it has become surplus to its operational requirements. The company considered listing its property arm separately or unbundling it to investors. In the end, Shanghai Zendai’s acquisition of the land was considered a better deal for AECI shareholders.

Johannesburg is expected to continue to grow under governmental support through massive infrastructure spending over the next 10 years.

AECI CEO Mark Dytor says the sale is aligned with the group’s strategy and the property is fairly valued. AECI Group’s shares closed 2.1% higher at R123.50 on Tuesday, just R3 shy of its record high, taking the total gain to 67% since November 2012 after it announced it had received a payment guarantee for the sale of land.

Shanghai Zendai wants to buy more land in South Africa to diversify its portfolio “in order to build a more stable income stream.” It may also use the acquisition as a launch pad to expand operations in the rest of Africa.

The Shanghai-based developer with a presence in 12 cities in China also has a 45% stake in a 320,000 square meter residential, hotel and commercial project in Auckland, New Zealand.

Chinese property developers have expanded into the U.S., Australia, the U.K. and Southeast Asia in the past year.

Head of Edward Nathan Sonnenberg’s China practice, Ernie Lai King, advised the deal. He says it bodes well for South Africa’s international reputation as an investment destination.

Lai King says Shanghai Zendai, which is listed in Hong Kong, is “highly respected” in the property development industry. The deal has been in the pipeline for the last 3 years and the serious negotiations began approximately 12 months ago.

He says the company’s vision is to build a brand new city, describing the company’s founder Dai Zhikang as a “visionary” whose plans for the development are “breathtaking.”

Dai is one of the most sophisticated business operators in China. His spiritual approach makes him unusual amongst China’s property developers, and motivates the way he blends architecture, interior design and psychology.

With upmarket hotels and art galleries amongst its holdings, his Shanghai Zendai company is associated in the public mind with fashionable, mixed-use developments combining retail, office and residential zones.

Source :

Posted on : 30 Nov,-0001

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