Vantone Jumps into Industrial Real Estate Market

Privately-owned Beijing real estate developer Vantone announced recently that it  has signed a memorandum in Beijing with local food company Huiyuan to facilitate the use of industrial property such as factories owned by Huiyuan.

The first round of projects will be completed this year, according to the China Securities Journal.

Both companies have confirmed that the partnership will aim for "value-added management," which refers to a company buying land from a business only to then rent it to the same business.

Manufacturers can use capital more flexibly and focus their main business if they don't have to worry about property devaluation and maintenance. Renting can provide this freedom, and can help businesses improve their debt-to-assets ratio.

Vantone will buy industrial land and factories from Huiyuan and then rent them back to Huiyuan.

Ping Lun, chairman of Vantone, said that the business of industrial land has become transformative for many real estate companies. "Many companies have expressed their interests and contacted with Vantone to know more about the formula," Lun said.

Vantone will rent industrial land areas of about 3 million meter squares for 800 million yuan (US$12.7 billion) a year over the next three years. The company plans to launch an IPO or real estate investment trusts in the near future.

The current average rent of China's industrial land is one-third that of the international average, meaning there is still room to develop, Liu said.