Investment

Zendai denies payment problems

By Wang Ying (China Daily)
Updated: 2010-09-15 07:51

Record-breaking land sales in China's first-tier cities have become increasingly frequent. Niu Yixin / For China Daily

SHANGHAI - Hong Kong-listed developer Shanghai Zendai Property Co Ltd, which made history in February by bidding a record-breaking price for a tract of real estate near the Bund, denied reports on Tuesday that the company failed to meet Tuesday's deadline for the second and final installment of 4.6 billion yuan ($682 million), or 50 percent of the price.

"As a matter of fact, Sept 14 is the starting date for our final payment. According to our current capital flow, we are capable of paying the money on time," Wang Fujie, a spokesman for Shanghai Zendai Property, told China Daily.

According to Wang, the actual deadline for the final installment is Nov 14.

Local media reported on Tuesday that the Shanghai municipal government may have to take back the land and Zendai and its three partners may be forced to forfeit 450 million yuan they have paid in deposits.

Zendai acquired the tract of land neighboring Shanghai's iconic Bund in February after bidding 9.22 billion yuan, or 34,148 yuan per square meter, a national record at the time.

Zendai announced it would jointly develop the land with Shanghai Forte Land Co Ltd, Hangzhou-based Greentown China Holdings Ltd and Shanghai Panshi Investment Management Co Ltd. The group paid the first installment of 4.6 billion yuan in May.

According to new land-bidding regulations, property developers have to pay the remaining 50 percent of the land price within four months of the initial payment.

Zendai's latest biannual report showed the property developer had 1.255 billion yuan in cash as of June 30.

Sources said that Zendai may request a postponement of the second payment to give it time to raise funds. But Lu Qilin, director of Shanghai-based Uwin Real Estate Research Center, said the government should strictly abide by the rules.

"If the developer cannot meet the deadline, both the 450-million-yuan land transfer deposit and the partial payment should be confiscated," said Lu.

"From Shanghai Zendai's case, developers can learn a lesson," said Hui Jianqiang, an analyst with E-House (China) Holdings Ltd, a property service provider.

"The company was too reckless to buy land at such a high price," said Hui.

In February, Beijing Dalong Estates Development Inc had its land repossessed by the Beijing municipal government due to its failure to pay up.

Growth in China's property prices slowed for the fourth straight month in August, according to data released by the National Bureau of Statistics, suggesting that the central government's efforts to cool the property market are paying off.

Housing prices in 70 major cities rose 9.3 percent year-on-year in August, down from 10.3 percent in July.

China Daily