Citic Capital to invest $220m in Changsha project

Citic Capital Holdings Ltd, the investment arm of sovereign wealth fund China Investment Corporation, has invested 1.5 billion yuan ($220 million) in a commercial property project in Changsha, Hunan province, a senior company official said on Thursday.

The company will acquire the project from a local developer and transform it into a shopping mall, said Stanley Ching, head of the Real Estate Group at Citic Capital.

The ID Mall project is located in the core business area of Changsha and has a gross floor area of 120,000 square meters.

According to Ching, the company will fund the deal with capital from Citic Capital China Real Estate Investment Fund III, which raised $400 million in December 2008. "We expect an annual return of around 10 to 20 percent from the investment," said Ching.

The deal marks Citic Capital's entry into the retail sector and a shift from residential property investments.

Prior to this, the company's real estate investments were largely centered on the residential sector.

"The shift follows the government's tightening policies in the residential sector and the company's plan to boost local demand," said Ching. "We are extremely optimistic about the growth potential in second-tier cities."