Capitaland (China) Investment signed an agreement with Orient Overseas (International) Ltd today (Jan.18) to purchase its subsidiary Orient Overseas Development Ltd (OODL) at a cost of $2.2 billion.

"The move is part of Capitaland's strategy to expand its property business in China," said Lim Ming Yan, vice chairman of Capitaland China Executive Committee.

Local property insiders said the purchase indicates that Capitaland China has initiated its new round of property development in China.

On completion of the purchase by the end of March, Capitaland China will raise its assets in the Capitaland Group from 28 per cent to 36 per cent, said Lim.

OODL with 190 employees has seven property projects of 1.48 million square meters in Shanghai, Kunshan of Jiangsu province and Tianjin respectively, with half for residence and others for offices, shopping malls and apartment hotels.

"The purchase is rational, based on a careful market analysis," said Jason Leow, CEO of Capitaland China.

"We have enough funds for our business expansion, for Capitaland has collected a considerable amount of capital from the financial market," said Leow.

In the past 18 months, its eight listed companies have got funds of 20 billion yuan from the securties market with its newly listed Capitamalls Asia getting capital of 13.7 billion yuan, giving a strong financial stimulus to its business expansion in China.

Capitaland has considered China as its largest overseas strategic market with an aim to create another Capitaland Group in China. In the past 15 years, it has developed successfully more than 100 real estate projects in China.

"Assets of Capitaland China are expected to occupy 45 per cent of that in the Capitaland Group within three to five years," said Lim.

Capitaland China owes its success to its stable development by abiding by a principle of purchasing no lands with high prices, said Leow.

"Our policy is that we purchase land when we have a stable funds chain," he said.

"This time, we did it after a careful market analysis and we know we can have an investment return," he said, adding that the price is reasonable and the project has a great potential in value due to its favourable location.

Lim said East China and North China are the investment focus of Capitaland China and the new project will add vitality to the regions' business.

Capaitaland China plans to develop 14,000 sets of apartments in the next several years, with every year having 5,000 sets in service.