(Yicai) July 30 -- Huafa Properties said the Chinese developer will incur a loss that exceeds half of last year’s profit on seven undeveloped plots of land earmarked for Shenzhen Qianhai Huafa Ice and Snow World after they were bought back by the city government.

Shenzhen reacquired the land parcels from Huafa for CNY4.4 billion (USD614 million), the Zhuhai-based company said yesterday, adding that it paid CNY5.8 billion for the 70,468 square meters of land. Huafa had a net profit of CNY951 million (USD132.5 million) in 2024.

The buy‑back price was in line with the land’s current market valuation, as determined by a third-party appraisal, Huafa pointed out.

The move reflects the softness of Shenzhen’s office premises market. Huafa said the city's real estate sector has undergone deep adjustments in recent years, with the office market in particular experiencing a sustained downturn.

Huafa’s shares [SHA: 600325] closed 0.6 percent lower at CNY4.95 (69 US cents) apiece in Shenzhen today, bringing the stock’s decline so far this year to 14 percent.

The reclaimed land formed part of the ongoing Qianhai Huafa Snow World project, a mixed‑use development that includes what will be the world's largest indoor skiing center, homes, shops, offices, and hotels. The loss of the seven plots will not affect its construction, Huafa noted.

Qianhai Huafa Snow World was jointly acquired by Huafa and Sunac Group in November 2020 for CNY12.7 billion (USD1.8 billion). But after Sunac defaulted on debts, Huafa acquired the full development rights to the project for CNY3.6 billion in 2023.

The seven plots were intended for a 420,000-sqm office space, a 36,400-sqm above-ground and underground commercial space, and 4,900 sqm of supporting facilities. Their return to government ownership means the office and commercial spaces will be scaled back.

Office and commercial space projects have long development and liquidity cycles and require large capital investment, which may restrict the company's other businesses, such as residential development, and impact its cash flow turnover, Huafa said.

Editors: Tang Shihua, Futura Costaglione