Property developer Shui On Land aims to accelerate its property sales and will consider spinning-off its commercial property assets to help fund the development of its large landbank in the mainland, its chairman said.
The China-focused luxury housing and commercial property developer changed its investment strategy after it found it could not roll over a US$375 million bond during the 2008 global financial crisis, chairman Vincent Lo said.
‘Banks wouldn’t do any business during the financial crisis – it was the most difficult time for me during my 38 years in business,’ Mr Lo told Reuters at Shui On’s headquarters in Hong Kong’s Wanchai business district. ‘After the financial crisis, we knew that we couldn’t rely (too much) on external funding and made up our mind to accelerate sales and construction.’
Shui On Land, one of the first Hong Kong-based companies to invest in China’s property market in the 1980s, has a land bank of 13 million square metres in the mainland, of which half is for retail and office purposes. ‘Now we have 5-6 million square metres of commercial land bank that needs a lot of money to develop,’ Mr Lo noted.
Shui On Land is considering spinning off its retail and office assets as a separately listed company that could self-finance its projects in the market, he said, but added that the company does not yet have specific plans for a spin-off.
Investment property accounts for nearly half of the company’s total net asset value of HK$46.7 billion (S$8.4 billion), according to a September estimate by Macquarie Research.
Competing with companies such as China Overseas Land and Shimao Property, Shui On Land plans to lift annual contract sales by five times to one million square metres by 2012 from about 200,000 square metres this year. That should grow at 20-30 per cent annually thereafter, Mr Lo added.
Mr Lo launched his business with a HK$100,000 loan from his father in 1971. In mainland China, he is best known as the developer of the iconic Shanghai Xintiandi, which means ‘New Heaven and Earth’ in Chinese, a shopping, office and residential complex that integrates local culture and history with modern living elements.
‘I’m proud that I have been able to assist in preserving the Shikumen buildings in Shanghai, which are unique to Shanghai,’ Mr Lo said, referring to the traditional ’stone gate’ architecture of the neighbourhood that houses the Xintiandi complex. ‘That set a trend on preservation.’ Shui On has replicated the approach in other Chinese cities.
Robust demand for luxury properties boosted Shui On’s 2009 contract sales to about 6 billion yuan (S$1.2 billion), up 64 per cent from 3.65 billion yuan last year, but sales and delivery are expected to slow in 2010 due to an uneven construction schedule.
Property firms often pre-sell housing units when projects are under construction but can only book revenues once the developments are completed and ready to be delivered.
‘We don’t have that many properties to sell next year so there will be a gap. But we have other plans and hope it will not affect our earnings,’ Mr Lo said.
Shui On Land is in preliminary talks to sell retail and commercial blocks to insurance companies. ‘I will not sell Xintiandi or Corporate Avenue but may consider selling others as we will continue to build more,’ he said.
Source: Business Times, 15 Dec 2009
No comments:
Post a Comment