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TheStreet Open House

China HGS Continues To Expand In Shaanxi Province With $12.43 Million Land Purchase In Fast Growing Yang County

HANZHONG, China, Nov. 29, 2011 /PRNewswire-Asia-FirstCall/ -- China HGS Real Estate Inc. ( NASDAQ : HGSH ) ("China HGS" or "the Company"), the leading residential and commercial property developer in China's southern Shaanxi province, today announced the Company is continuing to expand in Shaanxi Province with two new construction parcels totaling 90,776 square meters (980,380 square feet) it has acquired for $12.43 million in downtown Yang County, a fast growing city near Hanzhong. It anticipates constructing mainly a residential development with gross floor area of up to 1.9 million square feet, with ground breaking expected in 2012.  

The Company said it successfully acquired the development and use rights for the two properties from Hanzhong Yang County Land and Resources Reserve Bureau. The larger 69,913 square meter parcel (approximately 755,060 square feet), was acquired for RMB 60,825,000 (approximately $9.65 million), which is approximately $138 per square meter or $12.80 per square foot. The 20,863 square meter parcel (225,320 square feet) was acquired for RMB 870 per square meter, or approximately $133 per square meter, or $12.30 per square foot.

Under the purchase agreement, China HGS is required to make a 60% payment on the land and applicable taxes by December 2, 2011, with the remainder to be paid by January 20, 2012.  The Company believes it can finance the payments from cash reserves, but may borrow all or part of the payments at its discretion. Under the terms of the land purchase agreement, the Company is authorized to develop residential real estate projects on each parcel at a plot ratio of up to 1.95 (the plot ratio is the total gross floor area (GFA) divided by the actual land area). China HGS will therefore be allowed to develop residential properties with GFA of up to approximately 1.9 million square feet  

"With the continuing strong demand we see ahead for residential sales in the southern Shaanxi region, we expect to expand our market leadership there with this high quality land resource, while also expanding our footprint outside the region in other third and fourth tier cities where population growth continues to be spurred by the government," stated Mr. Xiaojun Zhu, CEO of China HGS Real Estate, Inc. "We expect to complete the project planning, design, and approvals for this new project in the near future and break ground in 2012. We fully anticipate this project will make an important contribution to our business going forward and we will provide more detailed updates as we progress."

About China HGS Real Estate Inc.  

China HGS Real Estate Inc., through its wholly owned subsidiary, Shaanxi Guangsha Investment and Development Group Co., Ltd., has specialized since 1995 in real estate development in China's third-tier and fourth-tier cities. The Company's real estate properties include multi-layer, sub-high-rise, and high-rise apartment buildings. The Company possesses the national Grade-I real estate qualification and was ranked as the No. 1 property developer in Hanzhong, Shaanxi Province in terms of market share in 2007, 2008, 2009, and 2010 successively.

Forward-looking Statements:

This press release contains certain statements that may include 'forward-looking statements'. All statements other than statements of historical fact included herein are 'forward-looking statements'. These forward looking statements are often identified by the use of forward-looking terminology such as 'believes,' 'expects' or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website http://www.sec.gov. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

Contact:

Mr. Ran Xiong, Deputy GME-mail: xr968@163.net Tel:  +86 (91) 6262 2612

SOURCE China HGS Real Estate Inc.

Copyright 2011 PR Newswire. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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