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UPDATE 1-China Vanke teams up with Dalian Wanda on real estate development
May 14, 2015 / 6:17 AM / 2 years ago

UPDATE 1-China Vanke teams up with Dalian Wanda on real estate development

* Property sector under pressure as economic growth slows

* Firms hope deal will lower operational costs (Adds comment, detail)

HONG KONG, May 14 (Reuters) - China Vanke said on Thursday it would form a partnership with Dalian Wanda Group to jointly acquire land and develop real estate projects.

The tie-up between the country’s two largest developers in the residential and commercial property sectors comes amid growing pressure from slowing sales and squeezed margins as growth stutters in the world’s No.2 economy.

“The partnership is expected to ... significantly raise the operational efficiency and lower operational costs to create bigger value for both companies,” Vanke said in a statement.

The two groups will join hands to bid for land, with Vanke responsible for residential development and Wanda focusing on commercial development, the statement added.

Dalian Wanda officials in Beijing were not immediately available for comment.

The parent company of Hong Kong-listed Dalian Wanda Commercial Properties Co, said last month it would follow an “asset-light” strategy for its growth plan, seeking outside investment to finance plazas and selling them off after five or seven years.

Dalian Wanda, owned by China’s richest man Wang Jianlin, aims to have 1,000 shopping malls open by 2025, a nine-fold jump from the end of last year.

First-quarter core profit at Vanke, which focuses on residential projects with a growing portfolio of commercial developments, fell 59 percent and its net profit margin dropped to less than 8 percent from 16.1 percent a year ago, hurt by fewer sales in first-tier cities.

Shares of Vanke and Dalian Wanda Commercial Properties rose 3.6 percent and 3.4 percent respectively after the announcement on Thursday. (Reporting by Clare Jim and Donny Kwok; Additional reporting by Matthew Miller in Shanghai; Editing by Joseph Radford)

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