Tiny, far-flung China Housing & Land Development has an answer to the global real-estate crisis: turn to western China.
Rising residential sales, higher prices and a better outlook give western China a much rosier glow despite uncertainty about housing almost everywhere.
Shares in the little-known, 10-year-old Xi’an developer has tripled in value since early March.
Reliable statistics on western Chinese real estate are hard to come by. But analysts say Xi’an — the eastern terminus of the Silk Road, the ancient network of trade routes across Asia linking it with Europe and northern Africa — wasn’t affected by the coastal real-estate bubble in China. Chinese real estate transactions increased in the first quarter by 8.2%. China Housing’s first-quarter sales of $13.8 million was 40% above forecast.
China Housing Chief Financial Officer Cangsang Huang says there may be problems ahead but Xi’an’s real-estate market never overheated and 2009 sales are actually up over 2008.
Ancient but urbanizing Xi’an, a city of eight million and home of China’s famous terra cotta army, is a government development target, with $7 billion pledged for infrastructure. China Housing benefited from plum government land sales.
Wall Street Journal said that CFO Cangsang Huang confirmed that the company acquired its prime asset for around half the market value — a 487-acre parcel near the heart of Xi’an.
The, on June 8, it broke ground on a major apartment development with partner Prax Capital.
Analysts say the cheap acreage followed years of public works projects, reflecting the company’s origins and Chairman Lu’s previous career. He retired as an army colonel in 1999.