China s hottest developer explains how his homes can be both fashionable and a good investment
Pan Shiyi,chairman and co-CEO of Beijing developer SOHO China, is China s answer to Donald Trump.
He is a business tycoon, one of the movers and shakers in China s booming real estate industry, with his hand on the tiller of a company that has generated hundreds of millions of US dollars.
He is also a fashion figure, making frequent appearances in the pages of the country s lifestyle magazines.
And he is a family man, husband of his business partner and wife, Zhang Xin, and father to their tow children.
Maverick and avant-garde real estate developer , is how some domestic media describe the 42-year-old Pan; it s a title he relishes.
To be avant vanguard, you have to be creative and original, Pan once told a reporter. Creativity and originality are what most Chinese property developers lack most.
Beijingers and visitors to the capital will probably be most familiar with his Jianwai SOHO development in the middle of the city.
SOHO China is always striving to be creative and innovative, And that s one trait that makes SOHO different from our peers, Pan claims.
In 1995, Pan and his wife, Zhang Xin, a Cambridge-educated investment banker, founded Beijing Redstone Industries, the predecessor of SOHO China.
Their first project was SOHO New Town, a home-office model project that instantly established Pan s name in the property industry.
The concept of SOHO, derved from Japan s small office, home office idea, or homes doubling as offices, proved to be a great success.
The novel idea caught the imagination of Beijing s young business people, sparking a buying spree.
The project, which officially went on the market in September 1998 and was completed in 2001, generated 4 billion yuan (US$493.2 million) for Pan, and was the top-selling project in Beijing in both 1999 and 2000.
Subsequent projects, also carrying the SOHO moniker, such as Jianwai SOHO, were all widely successful when they hit the market.
Having a good idea is only one ingredient for success in real estate development, Pan says. You have to have quality design and satisfy your customers if your story is to be repeated and sustained.
Pan always refers to his company as a designer developer, one that not only values novel ideas but also cares for original design.
"Rather than churning out wholesale houses like many other property companies, we only construct designer houses, "stresses Pan, from behind his signature black-framed glasses.
SOHO China, he says, pays great attention to every detail of its product.
All SOHO s projects are fashionable in design and flexible in function, features that Pan says he is very proud of.
Projects, like SOHO New Town and Jianway SOHO, have become landmarks.
Pan says he is aware that people buying property are doing more than simply finding a place to live they are making an investment.
"When customers buy our houses, we are trying to ensure their value will grow in the future, they are not just buying houses, they are buying assets.
"If they find the value of their properties increases over time, they will come and buy from us again without any further marketing," Pan explains.
"Of our 6,000-plus customers, many of them have bought more than one SOHO China property."
More importantly, Pan says, they will also persuade their friends to buy into the SOHO name.
"Many of our buyers are introduced to us by their friends or relatives, that s the power of word-of-mouth."
SOHO China does not advertise in the print media, in stark contrast to other property companies who bombard potential home-buyers.
The reason "Because we find the ward-of-mouth is the most effective marketing tool, "Pan replies bluntly.
The company spent only 6 million yuan US$742,000 on PR for Jianwai SOHO last year, a figure that will remain unchanged this year.
Although SOHO China is almost a household name, if measured in terms of revenue, the company is still relatively small.
It achieved sales revenue of 3.6 billion yuan US$445 million last year.
"In terms of scale, SOHO is just a small boy, dwarfed by many towering giants, "Pan admits.
"We focus more on quality development rather than on sheer size and scale."
Apart from the Boao Canal Village, a small community f seaside condominiums in South China s Hainan Province, SOHO China only operates in Beijing, where it is focuses on the city s Central Business district CBD ,a strategy Pan says he will firmly stick to in the future.
"Choosing the right site is of vital importance to us. Developing projects in CBD areas ensures resilient demand," says Pan, outlining his development philosophy.
"Our strategy is this focus on a small area and do it right.
"What makes us stand out is our product, the quality of the houses that we build, but not our sheer company size. "SOHO China is a quality developer, not a quantity one."
For property developers around the country,2005 was a hard year as the central government resorted to macroeconomic control measures to cool down the overheating property market.
Measures taken so far include the tightening of credit and land approval, two vital channels for real estate companies.
According to Pan,SOHO China has zero growth so far this year, compared to the same period last year.
"But even so, we still have a good financial situation thanks to our quality development," Pan says.
As many other developers are squeezed by tight credit,SOHO China, Pan claims, is "still awash with cash".
"We have even been approached by some banks asking us to borrow from them," Pan adds.
SOHO China attempted to no public overseas in 2002.
"We had all the necessary papers, but the stock market was not favourable due to the Iraq war, which prompted us to cancel the deal." Pan says.
For the time being, Pan says he has no more plans to try and float again.
"We will continue to focus on Beijing s CBD area, there is no shortage of funds so there is no need for an IPO," says Pan, "SOHO China only does things at which we are good."
