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China HGS Real Estate Inc. (HGSH) Yangzhou Pearl Garden Phase III Project Receives Better than Expected Residential/Commercial Unit Presales

China HGS Real Estate, a national grade II real estate-qualified developer focusing on Tier-III and Tier-IV cities in China, reported excellent sales today of units at the Company’s recently opened Yangzhou Pearl Garden Phase III Project in Shaanxi Province’s Yang County.

The Company, which was ranked by market share to be the No. 1 property developer in Hanzhong (Shaanxi Province) for 2007-2009, conducts substantially all of its business via wholly owned subsidiary, Shaanxi Guangsha Investment and Development Group Co., Ltd.

The Pearl Garden III project began construction in March 2010 and the Company expects to finish all pending construction activities by June 2011. The project consists of a total of 392 apartment units and while the project has just recently opened, the citizens of Yang County, Hanzhong’s biggest district at 440k people, are already flocking to the new development.

The ten, multi-layer building, Pearl Garden III project was designed to be completed in two distinct phases and when it is complete, the development will host a total of 44,819 square meters of residential space, 3,064 square meters of commercial space and 7,791 square meters of additional space.

During the five-week period between opening of pre-sales on Feb. 12, 2011 and March 17, the Company sold 246 units, 143 apartment at $411 per square meter, 98 basement at 122/Sq. m and 5 commercial at $816/Sq. m, receiving some $5M in deposits as well. Projections (based on Feb. 2011 pricing) indicate that HGSH stands to generate a total of $22.9M in revenues from sales at The Pearl Garden III.

Yang County is a hot target for real estate development and the Company is shrewdly developing within ideal income ranges for the market. Plans to expand in Yang County are already underway and future success will be driven by the established reputation HGSH has cultivated thus far with the people, especially in Hanzhong.

CEO of HGSH, Xiaojun Zhu, noted how these presale figures vastly exceeded initial receptivity expectations, explaining that, despite the Chinese Government’s move to cool off overheated Chinese real estate markets across the board, HGSH was uniquely well-positioned to weather the change and prosper besides.

The focus on Tier-III and IV cities, where the market is less overheated and still has solid demand from first time apartment buyers, is a key aspect of the Company’s agile footing. Confidence is high at HGSH going into the rest of 2011, as Yang County continues to see organic growth in markets relevant to the Company’s bottom line.

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