Moving up the property ladder

By Xing Zhigang and Li Jiabao (China Daily) Updated: 2014-05-20 07:01

The move paid off as the company saw its profits rise steadily from 2004 to 2007 with hardly any competition. Although the market in subsequent years turned bearish, prospects have recovered this year, he said.

"The realty market in South Africa is slowly returning to normalcy. But there are still risks like currency fluctuations, higher operating costs and weak industrial facilities. But the silver lining has been the buoyant local demand, which we expect will provide the right cushion for sustained growth," Cheng said.

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Yet another reason for the Chinese company to be bullish about South Africa is the steady demand among the local populace for new houses. "People want their houses to reflect their lifestyle changes."

Cheng added that the company will need to tweak its long-term strategies to stay profitable. He said that over the next decade, the company plans to move away from small projects toward urban development and large community projects.

"By taking on such projects, we will be able to enhance or even double our land value and also offset other rising costs. We are confident as Johannesburg is a major economic hub in Africa. We will also consider moving on to other African markets as we want to tap into growth opportunities on the continent," Cheng said.

The company has land reserves totaling more than 300 hectares, with most of its holdings in Cape Town. That is also where the company will invest 10 billion rand ($1.14 billion) to develop luxury resorts, Cheng said.

Galencia has, to date, developed 10 realty projects in South Africa and added about 1,000 new houses every year to the property market there. The company's average annual investment works out to between 400 million and 500 million rand, Cheng said.

"The main difference between us and others is the way we gauge and tap potential demand." he said. "By offering interior decoration and gardening services, we have been able to leapfrog our competitors and forge strong bonds with local customers."