Property developers China Vanke and Dalian Wanda form strategic alliance

Two of China’s top developers are teaming up in a move that underscores consolidation in an industry hit by a market downturn.

China Vanke, the country’s largest homebuilder, has formed a partnership with leading commercial property developer Dalian Wanda Group for strategic cooperation on land purchases and joint project development.

The shares of both companies rose after the announcement on Thursday. The partnership aims to see each gaining from the other’s strengths – Wanda in commercial development and Vanke in residential – they said at a joint media briefing in Beijing.

Vanke chief executive Yu Liang said: “The golden era for China’s property market has ended and the silver era has started. In the face of new challenges, there’s no single company that has all the resources or strengths required by the market.”

China Vanke’s shares closed up 1.63 per cent at HK$19.92, after hitting an intraday high of HK$20.85. Its A shares in Shenzhen fell 0.75 per cent to 14.59 yuan (HK$18.50).

Dalian Wanda’s arm, Dalian Commercial Properties, rose 1.79 per cent to close at HK$68.20, after an intraday high of HK$69.40.

Analysts expect to see more cooperation among mainland Chinese property firms as the market consolidates following the onset of a slowdown last year.

Leading names with strong fundamentals are expected to boost their market positions, according to Edison Bian, the head of the China property research department at UOB Kay Hian (Hong Kong).

Wang Jianlin, the chairman of Dalian Wanda, said the cooperation could go beyond property. “We are in discussion about something bigger, which might involve hundreds of billions of yuan,” Wang said. “But we cannot disclose further details at this stage.”

Source – SCMP