Vanke Service, an affiliate of Chinese residential property developer China Vanke, on Thursday inked an agreement with real estate brokerage firm Cushman & Wakefield to set up a joint venture to enhance their real estate business in Greater China.
The joint venture plans to focus on commercial property and asset management as well as integrated facility management.
“Vanke Service opened up a route for internationalization through business integration,” said Vanke Service CEO Zhu Baoquan, as cited by Chinese state-owned publication China Economic Net.
Commercial real estate transaction volumes in the country reached a record high of $25 billion in the first half of 2019, driven by a bumper in the first quarter when investment volumes jumped 174 per cent year-on-year to $17 billion, according to a report by Jones Lang LaSalle.
The joint venture is the latest attempt by the two companies to advance their cooperation to capture business opportunities in China’s massive real estate market.
Vanke Service previously agreed to acquire 4.9 per cent stake in Cushman & Wakefield, ahead of the latter’s planned initial public offering (IPO) on the New York stock exchange, according to documents filed with the Securities Exchange Commission in late July 2019.
Under the terms of the agreement, Vanke Service would purchase up to 10.6 million shares in Cushman & Wakefield, which accounted for about $166.7 million based on the final share price of $17 apiece. The deal made Vanke Service become the firm’s fourth-largest shareholder, after TPG, PAG Asia Capital, the private-equity business of PAG, and Ontario Teachers’ Pension Plan.
China Vanke booked revenue of 139.32 billion yuan ($19.82 billion) in the first half of 2019, up 32.86 per cent year-on-year. The gross profit increased 42.74 per cent to reach 50.49 billion yuan ($7.18 billion) during the same period, according to the company’s 2019 interim report.