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(13-05-2016, 12:23 PM)gzbkel Wrote: The remaining lease for the CRCT properties range from around 20 to 28 years.
That is very short, like industrial properties in Singapore.
Anyone knows what happens when the land lease expires in China? Do you get a chance to renew, or does the land and building revert back to the Chinese government and value becomes zero?
I checked with IR, and reply is "As there is no precedent case, we are unable to advise for now. We will share when we have a clearer picture of the Chinese government’s approach towards this."
In recent times, it has been found that China and Hong Kong government let the lease run to zero, contrary to Singapore land policies.
Land is not returned to the government yet but instead the land owner continues to pay an annual land premieum to continue owning. In HK case, the law has been passed that post lease is zero, the owner continues to pay 3% of appraised land value annually for a 50 year period.
On balance sheet, this has some implications. On balance sheet, this leaves valuers with one main valuation method and due to nett annual land rent, valuations of properties have now been lower partly due to it in Hong Kong. Due to the fact, valuers cannot argue that land on the current lease is valuable in Hong Kong anymore because it has been confirmed that current leases run to zero (the bill was passed in June 2024) .