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SOHO China shifts strategy to bank on office rental
By Cherry Cao |
August 16, 2012, Thursday
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Online Edition
Online Edition
SOHO China Ltd, a major commercial real estate developer in China, today announced a strategic move to shift from its current "build-and-sell" business model to "build-and-hold" amid huge growth potentials in both rental and capital values of prime office buildings in Beijing and Shanghai.
The Beijing-based developer intends to hold prime office and retail space totaling 1.5 million square meters -- 1.12 million square meters in Shanghai and 380,000 square meters in Beijing -- and expects annual rental income from existing portfolios to exceed 4 billion yuan (US$630 million) in five years, SOHO China said in a statement.
"Beijing and Shanghai's position as national and international business centers, coupled with very limited supply of offices in prime locations in the two cities, will lead to further growth of rental and value of office buildings in the future," said Pan Shiyi, chairman of SOHO China. "We hope rental income to become a major source of our profit in three years while sales will become supplementary."
Office rentals in Beijing and Shanghai rose 73 percent and 18 percent, respectively, over the past 18 months, according to the statement, citing research released by international real estate services provider CB Richard Ellis.
The company also announced its unaudited interim result today.
For the six months ended June 30, 2012, turnover dropped 54 percent to 1.22 billion yuan. The plunge was mainly due to no new completion of projects for booking during the period, it said. Net profit attributable to equity shareholders, meanwhile, dropped 65 percent year on year to 613 million yuan.
The Beijing-based developer intends to hold prime office and retail space totaling 1.5 million square meters -- 1.12 million square meters in Shanghai and 380,000 square meters in Beijing -- and expects annual rental income from existing portfolios to exceed 4 billion yuan (US$630 million) in five years, SOHO China said in a statement.
"Beijing and Shanghai's position as national and international business centers, coupled with very limited supply of offices in prime locations in the two cities, will lead to further growth of rental and value of office buildings in the future," said Pan Shiyi, chairman of SOHO China. "We hope rental income to become a major source of our profit in three years while sales will become supplementary."
Office rentals in Beijing and Shanghai rose 73 percent and 18 percent, respectively, over the past 18 months, according to the statement, citing research released by international real estate services provider CB Richard Ellis.
The company also announced its unaudited interim result today.
For the six months ended June 30, 2012, turnover dropped 54 percent to 1.22 billion yuan. The plunge was mainly due to no new completion of projects for booking during the period, it said. Net profit attributable to equity shareholders, meanwhile, dropped 65 percent year on year to 613 million yuan.
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