"The sales of our two projects have taking up 65% of CBD, and whom I can compete with?" says Pan Shiyi. His orientation is just one kilometer around World Trade Bridge, which will not make any change till 2007. On the point of this view, Mr. Pan Shiyi, the president of SOHO China, looks like a "landlord" of CBD.
Within less than 4 km2, Pan has had 4 projects and the fifth is still in negotiation. Over the past more than 7 years, except for several projects for acclamation, Pan hasn't got away from CBD. "In more than 2 years, I feel a little bit suffering that others are busy in a whirl, but I am standing still." Pan says to the correspondent, "however, I think it is not necessary to take the risk." Facing at the national macro regulation and the land policy regulation, Pan almost flips over all the obstacles. He says, all the plans before 2007 have been made, it is time for him to have a rest in September, more than 100 sales should also have a vacation, and remember, "don't rash advance".
Beijing CBD:In this year, the national macro regulation is a little bit stern, what's its impact on you?
Pan Shiyi:On the financial aspect, first, the proportion of the funds due owned by the real estate company is improved, from 25% up to 30%, and then, up 5% more to 35%. This policy has no any impact on us, since we have the 100% funds due, without debit. Second, the reserve of the bank is improved, from 6% to 7.5%. Each 1.5% increased, the banks in China will reduce 150 billion yuan loan to the enterprises, so there are 450 billion yuan can't be loaned out. However, this policy also has no influence on us.
Another policy is to increase the entry requirement on mortgage loan, which severely affect the commercial mortgage loan, and decrease our sales repayment. But from the perspective of the whole situation, the impact is not so negative, since most of the buyers are purchasing the first house rather than the second.
As for the land policy, it is the 8.31 Restriction, which actually was the policy implemented since July 1st, 2002, the File No. 71 being as the succession of File No.11. This policy also has no impact on us because we have no project that hasn't been ratified. Now, in spite of the unpublished land list, the standard was issued. Therefore, every one knows weather he can pass through the governmental verification. On account of projects, there are 280 projects approved, but the area is not much.
Based on my calculation, from the perspective of area, only 15% passed through the 8?31 Restriction. The projects inside of Loop 4 are not exceeding of 30%, and most of the projects are out side of the Loop 4. therefore, it is the 8?31 Restriction that is playing the significant role on real estate sector.
In addition, there are two land policies, i.e., the land in Beijing will be frozen for half a year, and the land levied from the farmers but not passed the land levitation procedure will not be approved. In addition, there is a file issued by the State Council that the place with too many move disputes is not allowed for dismantling. These two policies actually impact the land supply, but we have no project intriguing in move disputes.
After carefully combing, except for the influence of the mortgage loan entry rules, there is no other impact on us.
Beijing CBD:As for the sign of the fluctuation on policy, you seem like more sensitive?
Pan Shiyi:There is something you can't predict at all, such as the File No.121 issued by the People's Bank of China, belonging to the contingency, but the File No.11 and File No.71 issued by The Ministry of Land and Resources P.R.C. on May 2002 and fulfilled on July. And then, The Ministry of Land and Resources and Ministry of Supervision of The People's Republic of China often iterated that the land transaction should be justified, carrying out tendering, auction and license, which led to getting flurried. Finally, the result of 8.31, 85% construction area not getting approval. In the early half year of 2002, this file was published already, so we should have the vision not taking this risk.
In the past 2002, 2003 and 2004, we were able to capture a land with others. In those 2 years, I feel a little bit painful that others are busy in a whirl, but I am standing still like the hero Qiu Shaoyun, since we acknowledge that the File No.11 would be carried out, so it is not necessary to gamble for this adventure.
Beijing CBD:Is there any conflict between your conservative management and fashionable architecture?
Pan Shiyi:They are harmonious actually.
I am not fashionable on architecture either, but just wanna a good construction, neither the fake of antique, nor following the foreigners. The good construction should belong to the modern China and should be internationalized. Now there is an opinion very terrible, i.e., to mention the colonization of the architecture, saying Beijing as a dump or trial ground of architecture. I think such opinion is very retroactive.
For the safety and cost of the construction, we are still quite conservative. The safety takes the priority, and it is not a problem to spend money. So our demand for reinforced bar per square meter is higher than that in other projects, for others at most 70 Kg/m2 or so, but ours at 110 Kg/m2 or so. In addition, we strictly control the budget, and the architects must strictly in performance of budget.
Do not rash advance on real estate development. Last year the sale at one billion, this year yelling at 10 billion, rash advance is very very dangerous. The Chinese enterprises are rash advance on laws, and on finance. Such lessons are quite much, especially the big companies, so I am very prudent both on operation and laws. If I couldn't pass the 8?31 Restriction, how frustrated I am, and how can I accept your interview. Probably tens of millions of capital was trigged.
Beijing CBD:So you have been nestling in CBD?
Pan Shiyi:I am highly thinking of CBD. After the economic situation enters into a certain stage, all the businessmen should be gathered, getting more opportunities and higher efficiency. In CBD, you can have a negotiation and sign a contract by walk. In addition, there are many opportunities here, in caf , on the street, many businessmen here, and the contracts can be signed easily. Here it is CBD, and the formation of CBDs around the world is because of this reason.Jianwai SOHO accounts for 45% of the total sales in CBD, in addition with 4 billion yuan on SOHO New Town, so the sales of my developed projects take up more than 65% of CBD.
Beijing CBD:As for the SOHO New Town and Jianwai SOHO, you chase after the harmonious working and living; as for the second phase and third phase of The Spaces International Center, and the CBD-01 land auctioned in recent days, what is your plan for them?
Pan Shiyi:Integration, we still focus on the integration, since it is an integration era.
Regardless of the Jianwai SOHO or SOHO New Town, we highlight the combination between the residence and office. SOHO, The Spaces International Center, and CBD01 block, as well as another land block, we will integrate the commerce, exhibition and offices.
We are trying to combine these factors, and submit this conceive to the architects, so that they can design the constructions with the architecture language. The architects are very excited since it is the development trend in the future.
Beijing CBD:Don't you want layout in the whole state?
Pan Shiyi:The land blocks we have got are sufficient enough for our company to hit the target by the end of 2007. I have made the schedule on these projects. As for others, we can make the new plan after 2007. Of course, the opportunities are always.We can talk about developing in other places after 2007.
