One of Beijing s leading developers has warned those thinking of investing in property in the city to be prepared for a volatile few months.
Soho China chairman Pan Shiyi said a number of developers could run into trouble with the central government, which is determined to crack down hard on the illegal use of land as part of its drive for the healthy development of the real estate industry.
In the near future, we will see a number of developers who illegally possess land in the city be detained. And that will result in volatility in the industry, said Mr. Pan, a private developer known for his residential and commercial Jianwai Soho complex in Beijing.
In the short term, overseas investors will be confused about the outlook of Beijing s property market. But it will be good for the industry s development in the long run.
His comments came a day after the Ministry of Land Resources issued a circular calling for standardized land registration procedures across the country.
Mainland authorities said about 168,000 cases involving illegal land use had been investigated this year, twice as many as in the same period last year.
Mr Pan said he welcomed the expected shake-up.
There are too many property developers in Beijing, some will be driven out of the market, he said.
The clean up would help the industry s development and improve overseas investors perceptions of the city s property sector.
At the right time, we will reconsider a listing in Hong Kong, Mr. Pan said.
In October last year, Soho China deferred a US$200 million share offering in Hong Kong.
It was reported that the postpone was caused by the management s aggressive valuation of the company and concerns among potential underwriters that the high price-earnings ratio would turn investors off.
But those suppositions were denied by Mr. Pan, who said the delay was due to an unfavorable stock market environment in Hong Kong at the time.
Established in 1995, Soho focuses on mid-tier to high-end residential, commercial and office property development.
Last year, its profit was 128 million yuan (HK$118.91 million).
Yesterday, Soho signed a cooperation agreement with Centaline Property Agency, which will help market Jianwai Soho in Hong Kong.
While the central government is introducing a series of economic boosters to help Hong Kong s economy, we also come here with our project to give Hong Kong people an opportunity to make money, said Mr. Pan, adding that rental returns on Beijing properties were more than 10 per cent a year.
