UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of Earliest Event Reported): June 14, 2011
 
CHINA HGS REAL ESTATE INC.
(Exact name of registrant as specified in its charter)

Florida
001-34864
33-0961490
(State or other jurisdiction of
(Commission File Number)
(IRS Employer Identification No.)
incorporation or organization)
   

6 Xinghan Road, 19th Floor, Hanzhong City
Shaanxi Province, PRC 723000
(Address of principal executive offices)

(86) 091 - 62622612
 (Registrant’s telephone number, including area code)
 
N/A
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
 
o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
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Item 1.01 Entry into a Material Definitive Agreement.

The Company entered a residential-apartment bulk-purchase agreement (the “Agreement”) with Hanzhong Municipal Bureau of Justice (the “Purchaser”) on June 8, 2011. Pursuant to this Agreement, the Purchaser will purchase a total of 112 residential-apartment units in Tower B3 of the Company’s “Mingzhu Beiyuan” project located in downtown Hanzhong for a total price of RMB 60 million (approximately $9.2 million) (the “Bulk-purchase”). According to this Agreement, the Purchaser has agreed to pay RMB100, 000 for each apartment unit within 10 days after the date of the Agreement, and pay 50% of the total price (RMB 30 million, or approximately $4.6 million) to the Company by the end of August 2011. The Company shall complete and deliver all residential apartments under the contract within two and a half years of the date of signing the Agreement.

The foregoing summary of the Bulk-purchase does not purport to be complete and is qualified in its entirety by reference to the Bulk-purchase Agreement, copy of which is attached hereto as Exhibits 10.1.
 
Item 8.01 Other Events
 
On June 14, 2011, the Company issued a press release announcing the Bulk-purchase.
 
A copy of the Press Release is furnished as Exhibit 99.1 hereto and is incorporated by reference herein.  The description of the Press Release contained herein is qualified in its entirety by the full text of such exhibit.
 
Item 9.01 Financial Statements and Exhibits

(d)   Exhibits

Exhibit No.
 
Description
10.1
 
Bulk-purchase Agreement by and between the Company and Hanzhong Municipal Bureau of Justice, dated June 8, 2011.
     
99.1
 
Press release of the Company issued on June 14, 2011.
 
 

 
 
 
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SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
CHINA HGS REAL ESTATE, INC.
 
    (Registrant)  
       
Date: June 14, 2011
By:
/s/ Xiaojun Zhu  
    Xiaojun Zhu  
   
Chief Executive Officer, Chief Financial Officer and Chairman of the Board
 
       
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Exhibit 10.1
 
 

Residential Apartment Bulk Purchasing Agreement
Buyer: Hanzhong Municipal Bureau of Justice   (“Party A”)
 
Seller: Shaanxi Guangsha Investment and Development Group Co., Ltd.  (“Party B”)
Under the principle of high quality and favorable pricing from Party B, with individual consents and Party A’s lead, according to the related regulations under “CONTRACT LAW OF THE PEOPLE'S REPUBLIC OF CHINA” and the “LAW OF THE PEOPLES REPUBLIC OF CHINA ON ADMINISTRATION OF THE URBAN REAL ESTATE”, at equality, voluntary, and on the basis of consensus, Party A and Party B reached the following preliminary agreement with regard to the bulk purchase of the residential apartments:

Article 1 The Basis of the project under construction
The bulk-purchase target is located in Guangsha Mingzhu Beiyuan, which is classified for the usage as residential property, with 70 yeas’ of use right. (Land certificate: Han Shi Guo Yong (tu) Zi No. 4659).

Article 2 Brief description of the Party A bulk purchased residential apartment
1. According to the latest project plan, the location is the entire Tower B3
2. Party A bulk purchased 112 units of residential apartments
3. All of Party A bulk purchased apartments are structured with two elevators and four units of apartments on each floor. The Tower has 28 floors. The apartments comprise two models: GFA of 125 square meters and GFA of 135 square meters (to be confirmed by Party A and Party B). The floor height is 3 meters per floor.

Article 3 Confirmation of bulk purchasing price and area
1. The unit price of the apartments starts from 3,000/RMB per square meter (3,000RMB/Sq. Meter is the price for apartments on the first floor. The price increases by 25RMB/Sq. Meter per floor), the price of 28 th floor is the same as 25 th ,this price agreed is confirmation price. It will not change for any circumstances. The price agreed herein excludes the expenses related to designs out of the scope of the design standard.
2. Party B shall ensure the unit price of Party A’s bulk purchase is no more than the unit price of the bulk purchase from other parties
3. The total area of the bulk purchase is based on the calculation from the project construction plan. The actual area will be re-measured after the completion of the project construction in accordance with the state measurement standard. The final area shall be in line with the measurement results of the local House Administration Bureau
4. The total contract amount of the bulk purchase is approximately RMB 60 million  (including parking and heating installation fees)
 
 Article 4 Payment terms
1. Each apartment owner shall make RMB 100,000 initial payment within 10 days after the date of this agreement. Following the initial payment, each apartment owner shall make additional payment to make the aggregate payment equal to 50% of the total apartment price (The total price of each apartment is temporarily set at RMB 400,000) by the end of August 2011. After the completion of the third floor of the apartment tower, each apartment owner shall make additional payment to make the aggregate payment equal to 70% of the total unit price. After the completion of the main body of the apartment tower, each apartment owner shall make additional payment to make the aggregate payment equal to 90% of the total unit price. The rest 10% payment will be cleared on the date of key-delivery. Party A shall be fully responsible for the project delay, rise of raw material prices, etc caused by the delayed payment as stipulated above
2. Party B shall only use the payment from Party A for the construction of the bulk purchased apartments. Party B is not allowed to use the payment from Party A for other business activities.
 
 
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Article 5 Project delivery timeline
Party B shall complete the project designs, approvals, and engineering preparation works within three months after the date of this agreement. Party A shall, in its best efforts, to cooperate with Party B during the project preparation process and to reduce the related expenses to the largest extent. Party B shall complete and deliver the residential apartments herein to Party A within two and a half years of the date of this agreement; Party B shall also be responsible to help Party A obtain the property ownership certificate within half year following the project delivery. Party A shall actively cooperate with Party B in this regard.

Article 6 Project Quality
The quality of the bulk purchasing residential apartment, which Party A provide to Party B ,should meet national related construction and quality standards.

Article 7 Liability for breach of contract
1. If Party B fail to complete the transaction (except the force majeure such as natural disaster, government policy, etc) or Party A fail to make the payment within the time frame stipulated in this agreement, the responsible party will assume the penalty at 0.1‰ of the total contract value per day.
2. Under the circumstance that Party A delay in making the purchase payments to Party B, Party A will assume the penalty at 0.1‰ of the total contract value per day.

Article 8 Additional agreement
1. Party A is prohibited from returning or exchanging the apartment after the execution of this agreement. If Party A return or exchange apartment without the written consent of Party B, Party A shall assume the penalty at 10% of the total contract value of this agreement.
2. If Party B cannot deliver all of the units of this bulk purchase at its own responsibility, or if Party B sells the contracted apartment units to other purchasers without the written consent of Party A, Party B will assume the penalty at 10% of the total contract value of this agreement.
3. After the signing of this agreement, Party B should carry out the project on schedule. Party B is not allowed to terminate this agreement for any reasons.

Article 9 Miscellaneous
1.The apartments covered in this bulk purchase agreement shall be equipped with central heating equipment. Party A and Party B will negotiate and sign separate agreement in this regard.(identical to Municipal Public Security Bureau)
2. Party B shall provide an underground parking slot to each apartment covered in this bulk purchase agreement. Party A shall ensure that over 90% of the apartment owners will purchase parking slot. Party A and Party B will negotiate the price and sign separate agreement in this regard. ( identical to Municipal Public Security Bureau)
3. The purchase price in this agreement does not include the property management fee. The residents from Party A will bear the property management fee on their own.
4. If Party A intend to add additional facilities out of the equipment listed in the attachment of this agreement, both Parties will negotiate the related expenses in accordance with the market condition.
5. After moving in, Party A must comply with the administrative guidelines set by Party B’s property management company and implement the relative fees to be negotiated by both Parties.

Article 10 This agreement shall become effective immediately after being signed and stamped by both Parties.

Article 11 This agreement has four duplicates with equal legal effect, each party holds two copies.

Buyer (Party A)( Stamp) Bureau of Justice of Hanzhong Municipality
Legal Representative (signature)
Seller (Party B)( Stamp) Shaanxi Guangsha Investment and Development Group Co., Ltd.
Legal Representative (signature)
Date:   June 8, 2011
Signing Address: Hantai District, Hanzhong city, Shaanxi province
 
 
 
 
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Exhibit 99.1
 
Company Contact    Investor Relations Contact:  
Mr. Ran Xiong, Deputy GM  Mr. Crocker Coulson, President  
E-mail: xr968@163.net   E-mail: crocker.coulson@ccgir.com  
Tel:  +86 (91) 6262 2612   Tel: +1 (646) 213-1915 (New York)  
     
  Mr. John Harmon, CFA, Sr. Account Manager  
  E-mail: john.harmon@ccgir.com  
  Tel: +86-10-6561-6886 (Beijing)  
 
For Immediate Release:
 
China HGS Signs Another Residential-Apartment Bulk-Purchase Agreement Worth US$ 9.2 Million
 
Hanzhong, Shaanxi province, CHINA – June 14, 2011 – China HGS Real Estate Inc. (NASDAQ: HGSH) (“China HGS” or “the Company”), a leading residential and commercial property developer in China’s southern Shaanxi province, today announced that the Company signed a residential-apartment bulk-purchase agreement (the “Agreement”) for a total price of RMB 60 million (approximately $9.2 million) with the Hanzhong Municipal Bureau of Justice (the “Purchaser”) on June 8, 2011.
 
The Agreement covers the entire Tower B3 of the Company’s “Mingzhu Beiyuan” project, which is comprised of a total of 112 residential-apartment units and is located in downtown Hanzhong. The contracted project is expected to be completed and delivered to the Purchaser within two and a half years after the date of the Agreement, according the timeline set forth in the Agreement. The total price of the Agreement is RMB 60 million (approximately $9.2 million), with an average sales price of RMB 309 per square foot (approximately $47.50 per sq. ft.).  According to the Agreement, the Hanzhong Municipal Bureau of Justice has agreed to make an initial payment of RMB 100,000 (approximately $15,385) for each apartment unit within 10 days of the date of the Agreement and make an additional payment to China HGS by the end of August 2011, raising its total payment to 50% of the total price (RMB 30 million, or approximately $4.6 million). Upon due payment of the contract price as agreed in the Agreement, China HGS  is required to complete the project design, obtain the necessary approvals, and perform the related preparation work within three months of the date of the Agreement.
 
“We are pleased to reach a second bulk-purchase agreement for our Mingzhu Beiyuan project only 10 days after signing our first bulk-purchase agreement with the Hanzhong Public Security Bureau,” commented Mr. Xiaojun Zhu, Chief Executive Officer of China HGS Real Estate, Inc. “The robust demand for China HGS’s properties reflects our leading reputation and the recognition of our company in our core market.  We look forward to continuing to deliver high-quality real estate products to our customers in the future.”
 
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 second-tier and third-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, and 2009 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.