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China HGS Real Estate, Inc. (HGSH) Expands with $12.43M Land Purchase

Today, China HGS Real Estate, Inc. announced a continuing expansion into the Shaanxi Province via two new land purchases. The combined total of land purchased is 90,776 square meters, at a cost of $12.43 million. The land is located in downtown Yang County.

China HGS is focused on real estate development, with the goal of constructing apartment buildings in third- and fourth-tier Chinese cities, including multilayer, sub-high-rise and high-rise buildings. China HGS has been ranked the #1 property developer in the Hanzhong, Shaanxi Province from 2007 to 2010 in terms of market share.

Under the terms of the purchase agreement, HGS will make a payment of 60% (including applicable taxes) by December 2, 2011, which will be paid from cash reserves and/or potential loans, with the remainder to be paid by January 20, 2012. HGS is authorized to build residential structures on each parcel of land at a ratio of up to 1.95. The plot ratio is the total gross floor area (GFA) divided by the actual land area. This will result in residential structures with a gross floor area of up to 1.9 million square feet.

Ground breaking on these projects is expected to begin in 2012.

Xiaojun Zhu, CEO of China HGS Real Estate, Inc., said, “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. 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.”

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