Chinese Developer Says Hanzhong Market Is Vibrant

Hanzhong, CHINA–Unlike most of the world, China’s multifamily market has been relatively healthy and even booming in parts of the country. Xinhua recently reported that average apartment rental rates in Beijing have risen 18.5 percent in the past 12 months and are likely to climb further in the second half. So much so that the average rental now exceeds the average monthly income of many migrant workers in the city. Apartment rents in the capital city average 2,790 yuan ($411) per month, according to figures provided by property agency Homelink Real Estate.

And developers like China HGS Real Estate Inc. are there to take advantage of this trend. The company has three projects currently under construction in the Shaanxi Province, which is home to the Xi’an Software Park. Hanzhong is located in the Shaanxi province. There is the Ming Zhu Xin Ju project, Phases II and III of the Ming Zhu Nan Yuan project, and the Yang Zhou Ming Zhu project.

The Xin Ju project in Hanzhong’s downtown comprises two high-rise apartment buildings (Tower A and Tower B) spread across 457 207.859 square feet. Approximately 96 percent of the entire project had been sold and the company is on schedule to completing and delivering Tower A in June 2011. China HGS completed construction and delivery of Tower B significantly ahead of schedule in June 2010.

The Nan Yuan II Project in downtown Hanzhong comprises four multi-layer residential buildings and five high-rise apartment buildings. China HGS has completed construction of four multi-layer buildings and these units were delivered to customers in March 2010. The construction of two of the five high-rise apartment buildings totaling 326 146.486 square feet, is expected to be completed by November 2010. About 80 percent of the twi buildings have either bee sold or reserved. Construction of two of the remaining three buildings is expected to be completed and delivered in March 2011. The third building is expected to be ready in September 2011.

The third project called Ming Zhu Nan Yuan has a total of three phases, of which construction of Phase I (25,704,048 square feet) was completed and delivered to customers in 2009, construction of Phase II (985,048497875 square feet) is estimated to be completed and delivered in September 2011, and construction of Phase III (685,348940142 square feet) will be complete in March 2011.

China HGS also recently commenced construction of over 10 multi-layer buildings at its Yang Zhou project in Yang County, which is expected to be completed over the course of 2011 and 2012

“Despite the tightening measures undertaken by the Chinese government in 2010 to control the overheated real estate market in certain Tier 1 cities, Hanzhong and the surrounding areas have continued to be vibrant markets during the first half of 2010,” says Xiaojun Zhu, chairman and CEO of China HGS. “Increasing flow of the population into urban areas, rising incomes, and affordable housing costs have contributed to strong demand, primarily by first-time homeowners. We are very confident that the economic growth in Hanzhong will continue to exhibit robust growth for the next several years, resulting in stable and growing demand for real estate.”
“We also expect the new multi-layer buildings we are constructing in Yang County to make meaningful revenue contributions over the next two years. We remain confident in our ability to meet our 2010 fiscal year guidance of revenue of approximately $47.5 million to $49.0 million and net income of $15.5 million to $16.0 million,” Zhu adds.

“The fact that the Xin Ju project was nearly sold out at the end of June 2010 is a reflection of the continued strong demand in the Hanzhong residential property market,” Zhu believes.