Property firms step up HK fundraising

Hong Kong-listed Longfor Properties, one of China's top 10 developers by revenue, announced Wednesday that it plans to raise HK$3.1 billion ($400 million) this week through an additional share offering at the Hong Kong Stock Exchange, a move which highlights the growing demand for funding among mainland developers as the region's land market thaws, say experts.

Longfor intends to sell 260 million shares priced at HK$11.88, 7.91 percent less than the closing price of its shares Tuesday, according to the company.

These funds will be used to pay land leasing fees and support daily operations at two newly launched projects in Hangzhou and Dalian, the business news portal hexun.com reported Wednesday, citing insiders from Longfor.

Longfor is not the only Hong Kong-listed mainland developer which has been on the hunt for additional capital offshore recently. Last Thursday, Kaisa Group Holdings Ltd announced that it issued $250 million worth of senior notes in Hong Kong. In August, R&F Properties and Road King Infrastructure Limited both announced plans to issue notes in the region.

"Property sales are much better this year than in 2011, so it's natural that big developers want to raise funding now to prepare for future operations," Liu Yuan, research director at Centaline China Real Estate, told the Global Times.

Favorable conditions in the mainland land market have probably provided developers with a strong incentive to search for money to expand their operations, according to Liu. "It is generally believed that developers are raising funds to purchase land rather than ease capital pressures," said Liu.

Longfor has undertaken more than 10 new projects this year, which together have required the company to spend several billion yuan in land leasing fees, according to a report by ccstock.cn, the official online portal of the Securities Daily. Other leading developers, including Vanke and Greenland, have also spent large sums on land use fees so far this month as well, the report added.

"The land market has recorded more transactions recently now that land prices are low and local governments put more plots up for lease to help balance their budgets ahead of the end of the year," Chen Yingya, a property market researcher from Century 21 China Real Estate, told the Global Times.