Guangzhou R&F Properties (2777), the city's largest property in Hong Kong developer, said it plans to expand into eastern China and aims to spend 10 billion yuan (HK$10.1 billion) in the next two years building a land bank in that market.
The Hong Kong-listed developer, tipped by tycoon Lee Shau-kee as a "dragon tail" stock, will begin its aggressive expansion plan with a 600 million yuan acquisition, chairman Li Szelim told a press conference Friday.

Within two weeks it expects to complete the acquisition of a company which owns land with a gross floor area of 400,000 square meters in Kunshan, Jiangsu province. Li said it plans to develop low-rise high-end housing.

"We hope to raise our investment in eastern China to account for 20-25 percent of our total investment in two years," said Li, adding that it is necessary to include the Yangtze River delta in the company's portfolio for more balanced development.

However, Li does not expect this eastern China investment to contribute to profit until 2009. Meanwhile, the firm aims to raise the profit contribution from rental income to account for no more than 25 percent of turnover in five years, Li said.

As at the end of 2006, R&F had a total land bank of 24.51 million square meters, in Guangzhou, Beijing, Tianjin, Xian, Chongqing and Hainan, plus investment properties including office buildings, hotels and shopping malls in Guangzhou, Tianjin and Beijing.

In 2006, R&F Properties posted an 81 percent jump in rental income to 78.66 million yuan - less than 0.01 percent of its turnover. Property sales - the major income stream - rose 74 percent to 10.11 billion yuan.

Total saleable area sold increased 19 percent to 1.03 million sq m in 2006. Li said R&F aims to roll out 1.6 million sq m in 2007. Some 700,000 sq m of this had been sold and brought in 7 billion yuan. About three million sq m would be rolled out in 2008.

Also, the company aims to post 1.6 billion yuan income from contracted sales in 2007, and forecasts an increase to 23 billion yuan in 2008.

The developer announced late Thursday that profit attributable to shareholders for the year to December 2006 soared 69 percent year on year to 2.135 billion yuan. Turnover rocketed to 10.19 billion yuan, up 74 percent. A 0.3 yuan final dividend was declared.