SINGAPORE (June 27): CapitaLand is acquiring a 100% stake in Chongqing Zhonghua Real Estate for RMB2.2 billion ($459 million) via the group’s wholly-owned subsidiary, Chongqing Kai Tai Industry Development.

Chongqing Zhonghua in turn owns a 32-hectare prime mixed use site in Xinpaifang, Chongqing, China, valued at $1.19 billion.

It comprises two greenfield sites for residential and retail development, as well as brownfield sites with an inventory of 223 residential units and 100,000 sq m of office and retail space that are either completed or are soon to be completed.

In a Monday filing, CapitaLand says it estimates the two greenfield sites to yield 1,900 residential units and a shopping mall with a combined gross floor area (GFA) of 335,000 sq m when fully developed by 2022.

“Given its significant scale, strategic location and excellent connectivity, the land parcel in Chongqing’s Xinpaifang is a prized acquisition that will boost CapitaLand’s land bank in a key gateway city in the South Western region of China,” says Lim Ming Yan, president & group CEO of CapitaLand Group.

“This latest acquisition rides on the strong sales momentum for the residential component of Raffles City Chongqing...  By leveraging our Group’s best-in-class design and development capabilities, we are confident of transforming the site into yet another vibrant and iconic mixeduse development that meets the evolving aspirations and needs of Chinese consumers,” he adds.

We notice that this could be CapitaLand’s first big investment in China since 2014 in the form of Capital Square in Shanghai, said analyst Tata Goeyardi of Soochow CSSD Capital Markets.

To be sure, CapitaLand has been focusing on delivering pipeline Raffles City projects for the past few years and selling existing inventories.

While there is no breakdown numbers yet on IRR or cost psf, Goeyardi views this capital deployment back to China as a positive move.

More importantly is the departure of CEO by end of 2018 and who the replacement will be as this affects CapitaLand’s strategic direction on capital allocation and execution, said Goeyardi.

“We see value when share price hits $3/share – not in hurry to accumulate the stock at this point,” says Goeyardi who has a consensus “buy” as well with $4.20 target price.

As at 10.52am, shares in CapitaLand are trading at 0.7 times book with 3.7% dividend yield.