Zhang Xin CEO of Soho

Soho China CEO Zhang Xin is confident that the listed Chinese developers will ride out the current difficulties. She describes the difficulties as temporary and to a large extent caused by government policies as the Beijing government tries to control inflation.

Meanwhile, the lack of readily available credit is actually causing opportunities for a cash-rich commercial real estate developer like Soho China.

The company focuses on prime locations—particularly the city’s central business district.

Zhang Xin said the company will be changing its strategy to sell virtually all of its property projects and gradually increase the portion of investment properties on its books.

She said, ‘In five years, we plan to hold about 1 million square metres of commercial space in central Beijing, which will represent 70% of our net asset value.’
Much more on this HERE.
Source: BusinessWeek

Housing in China

China’s real estate market remains an anomaly even though it has charted exemplary growth in the last decade.

Shanghai, Beijing, Guangzhou and Shenzhen are among China’s Tier-I cities most sought after by foreign investors, given their high levels of urbanization, mature property markets and extensive supply of quality buildings.

In 4Q07, China’s real estate investment witnessed a slowdown following the implementation of the land appreciation tax as well as additional restrictions imposed on foreign investment in the sector.

So far, the government’s tightening policies have been successful in that prices have stabilized, while volumes have contracted.

Much, much more (in fact, a full report and survey) on this HERE.
Source: The Edge Daily

Lujiazui Skyline Pudong

Global buyout funds and property investors including Blackstone Group are vying to buy up to four commercial buildings in Shanghai for as much as $1 billion.

Super Ocean Group has put a package of four buildings on sale as it seeks cash to support its growth in other sectors.

The four buildings to be sold by Super Ocean include the Bank of Shanghai Tower in the Lujiazui area of Shanghai’s Pudong financial district, and Southern Securities Mansion, located on Nanjing Road, one of China’s busiest commercial streets.

Super Ocean aims to sell the four buildings together but potential bidders have the option to purchase three of the four. They put the price tag for the deal at RMB5 billion to 7 billion ($728.8 million-$1.02 billion).

It is suggested that talks between Blackstone and Super Ocean could collapse over valuation of the buildings.

One source said, ‘It’s not easy for Blackstone and Super Ocean to reach a deal as Super Ocean is probably asking too much for these properties. There are also concerns about the ownership structure, which is a bit complicated for some of the four buildings.’
Source: Reuters

Shanghai’s real estate brokers may be required to pay deposits to obtain a business licence in the future. This is one of the latest ideas floated by local government to create a safe environment for second-hand property transactions.

The plan, developed by the city’s second-hand property trading center and launched recently on a trial basis, is designed to help eliminate unqualified brokerages from the crowded market, an industry source who declined to be identified told Shanghai Daily.

Deposits, kept in a designated bank account and supervised by the trading center, would vary. They could range from RMB1 million yuan (US$145,815) to RMB10 million, depending on the size of the company.

Two major scandals involving big real estate agencies from south China have damaged the credibility of the country’s property brokerage firms and attracted growing attention from industry experts, who are calling for more stringent regulations to safeguard the sector.

While it remains unclear how many real estate agencies are taking part in the trial and whether it might be implemented across the entire city, industry experts were understandably divided on the scheme. To some, it smacked of restrictive practice.
Source: Shanghai Daily

According to National Bureau of Statistics findings cited by state-run Xinhua News Agency the huge profits experienced by China’s real estate market in the past decade have come to an end.

The bureau of statistics said an easing economy and shrinking housing demand had started to drive down the growth of house prices.

The NBS comments also warned that in spite of the slowdown in price increases, the real-estate market was not expected to see a return to rational prices until reforms are implemented.

The report said the average growth rate for housing prices in January was 11.3% on year, but had shrunk to 8.2% in June

The report attributed the slowing of the country’s rapid housing-price rise to monetary policy tightening, as well as a move by China’s Cabinet — the State Council — to reclaim land that had been sitting idle for at least two years as of January.
Source: Market Watch