The chairman of Beijing-based developer Soho China has printed a rosy picture of the city's real-estate market for Hong Kong investors.
Following a trend set by other Beijing developers, Soho China is set to launch 400 apartments in a residential and commercial in a development on Changan Street, eastern Beijing, in Hong Kong next month.
The project, Jianwai Soho, covers a gross floor area of 700,000 square metres.
"We came here to give Hong Kong investors an opportunity to make money," Soho China chairman Pan Shiyi said in Hong Kong last week.
"Rental return is the most important factor in deciding where to invest. Returns (in Hong Kong) remain low. But the return on our project in Beijing can reach more than 10 per cent a year."
Winnie Yip, director and general manager of the Beijing office of DTZ Debenham Tie Leung, confirmed that rental returns in the city were attractive.
"Rental returns on Beijing residential properties average 15 per to 18 per cent, subject to their location and the quality of the projects," she said. "But we are facing a concern that capital values continue to depreciate as supply still outstrips demand."
"On the supply side, there are a lot of uncompleted projects on the market for presale, putting pressure on home prices."
DTZ Research (Beijing)'s index of prices fell 3 per cent to 126.3 in the third quarter from 130.2 in the second quarter, while the rent index was down a modest 0.76 per cent to 52.5 from 52.9.
Vacancies fell 3.85 per cent.
Ms Yip warned that there would be "a large supply" in the leasing market when the unfinished projects were ready for lease in 2007 and 2008.
But she said quality projects such as Jianwai Soho and Hongkong Land's Central Park were sought-after by home seekers.
Jianwai Soho comprises 18 apartment blocks, four blocks of villas, two office towers and 300 shops.
Soho China plans to launch its units in Hong Kong next month at 14,000 yuan per square metre, according to Centaline Property Aency, the Hong Kong marketing agent for the development.
