China HGS Begins Construction on a Large-Scale Residential Real Estate Project in Hanzhong

HANZHONG, China, Sept. 7, 2011 /PRNewswire-Asia-FirstCall/ -- China HGS Real Estate Inc. (NASDAQ:HGSH) ("China HGS" or "the Company"), one of the largest residential and commercial property developers in China's southern Shaanxi province, today announced that the Company has officially begun construction on a large-scale residential real estate project – the new phase of Mingzhu Beiyuan Project (the "Project").

Located in downtown Hanzhong and adjacent to the Company's existing Mingzhu Nanyuan Project, the new phase of Mingzhu Beiyuan Project is a high-grade residential community developed by China HGS with a total area of 88,644 sq. m. (approximately 957,355 sq. ft.). The Project comprises 20 high-rise apartment buildings with an average plot ratio of 3.3 and a total gross floor area (GFA) of 350,000 sq. m. (approximately 3.8 million sq. ft.), of which 290,000 sq. m. (or approximately 3.1 million sq. ft.) are residential apartments and 60,000 sq. m. (approximately 648,000 sq. ft.) consist of an underground parking area. The Project construction period comprises three years, and the total Project investment is RMB 750 million (approximately $117.2 million). By August 2011, China HGS had invested RMB 118 million (approximately $18.4 million) for the Project development. The remainder funds of the Project will be financed from customer deposits, as well as commercial bank loans. The Company expects to deliver the apartments to customers starting in the second half of 2013 and continuing through the first half of 2014.

As of August 31, 2011, China HGS had bulk-sold 382 apartment units of the Project, of which 336 units were sold to the Hanzhong Public Security Bureau and the Bureau of Justice of the Hanzhong Municipality. By the end of August 2011, China HGS had received RMB 76.4 million (approximately $12.0 million) in payments of the bulk-sales. Based on the current market sales price of the same area, China HGS expects total project revenue to be approximately RMB 1.4 billion (approximately $218.8 million).

"The new phase of Mingzhu Beiyuan Project has been an important planning property project for us during the past two years and we are pleased to have been able to start construction smoothly," commented Mr. Xiaojun Zhu, Chairman and Chief Executive Officer of China HGS. "We believe the real estate market in Hanzhong and the surrounding areas will continue to maintain its growth trend during the next several years. Therefore, the actual income from the Project may turn out to be higher than our current projection. We will leverage our capital and other resources, manage the project in accordance with our plan, and strive to make the new phase of Mingzhu Beiyuan as our next banner project."

About China HGS Real Estate Inc.

China HGS Real Estate Inc., through its wholly owned subsidiary, Shaanxi Guangsha Investment and Development Group Co., Ltd., specializes 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-II 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. These statements relate, but are not limited to, demand for property in Hanzhong and its surrounding areas, legislation affecting real estate on the national and local level, and property pricing.  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.

SOURCE China HGS Real Estate Inc.