Bloomberg - SOHO China Wins Beijing Land Auction for 4 Bln Yuan

By Bei Hu

Sept. 3 (Bloomberg) -- Soho China Ltd., the biggest developer in Beijing s central business district, today won an auction for a site in northeast of the capital for 4 billion yuan ($586 million), Chairman Pan Shiyi said.

The site in Wangjing, covering a gross area of nearly 500,000 square meters (5.4 million square feet), will be developed for office and retail use, Pan said during a conference call with journalists today. The site is in the same area as the local offices of Microsoft Corp., Siemens AG, Daimler AG s Mercedes-Benz Cars division and Caterpillar Inc.

Beijing-based Soho is shifting to commercial property which offers higher profit and is less subject to policy controls than housing, Pan said in May. Sales of homes, offices and shops in China surged 60 percent by value in the first seven months of the year from a year earlier, government figures show.

Construction on the new site is tentatively scheduled to start in the second half of next year with presales of properties due to begin in 2011, Pan told reporters in a conference call after the market closed to discuss the auction.

Revenue from the development, the bulk of which will be sold instead of retained as investment properties, may be booked as early as 2012, he added.

Details of the total investment in the project will be known when the design work is completed, Chief Financial Officer Wang Shaojian told reporters.

Government Rules

With a height limit of 200 meters (656 feet), the development will be the first landmark building from the airport to downtown Beijing, Pan said. We feel the price is reasonable.

Soho China won the auction against six rivals, mostly state-owned companies and an anonymous bidder, Pan said. Retail space will occupy no more than 50,000 square meters of the site, according to government regulations, Pan said. The remaining land will be used for office buildings.

Soho China presold more than 7 billion yuan ($1 billion) of properties in the first eight months of the year, Wang said. Total presales this year may hit 10 billion yuan, he added.

The developer has more than 30 billion yuan of properties under development that will be available for sale, excluding its project in the Qianmen area of Beijing, Pan said.

Soho China s shares rose 2.96 percent to HK$4.18 in Hong Kong today, the biggest gain since July 24. The stock has advanced 25.5 percent this year, compared with a 37 percent increase in the benchmark Hang Seng Index.

Soho is due to report its first-half earnings on Sept. 8.