COMPANIES - INTERNATIONAL
By ROBIN KWONG
349 words
9 October 2007
Financial Times
Asia Ed1
Page 24
English
(c) 2007 The Financial Times Limited. All rights reserved
Chinese property developers are suffering an acute lack of capital, the chief executive of newly listed Beijing commercial property developer Soho China told the Financial Times yesterday.
Zhang Xin said Chinese developers had little access to bank financing beyond very short-term loans for working capital. The central government has in recent years told banks to limit loans to developers in a largely unsuccessful effort to cool soaring property prices.
"The biggest constraint, by far, is capital," said Ms Zhang, one half of the husband-and-wife team managing the company. "If we choose one project, we are giving up five or six other opportunities."
Soho China, whose shares rose 15 per cent on its first day of trading in Hong Kong yesterday after raising Dollars 1.7bn in an initial public offering, is one of several Chinese property developers to tap Hong Kong s capital markets for funds through initial offerings recently.
Residential property developer Sino-Ocean Land raised Dollars 1.5bn in late September and Guangdong-based China Aoyuan Property Group Sunday said it raised Dollars 460m.
Ms Zhang said that the majority of roughly 500 Beijing-based developers are little-known, privately held companies that have to rely on pre-selling units to raise funding.
This means there will "definitely" be a wave of consolidation, Ms Zhang said, hinting that Soho China would acquire projects or distressed assets from other developers to fuel growth, rather than relying solely on building from the ground up using its own land bank.
"We believe we will capture those opportunities," she said. "Investors are looking to us to be the vehicles to do so rather than having to approach each developer themselves."
Ms Zhang said Soho China would continue to focus on high-end commercial properties in Beijing, in spite of concerns it is too reliant on the already booming market.
"Beijing delivered 57 per cent gross margin last year, and I don t see any other city in China that can deliver that," she said.
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