Focus on commercial projects

SOHO China Ltd will focus on commercial projects in Beijing and Shanghai to counter the downturn in the property market, its chairman, Pan Shiyi, said in Shanghai yesterday.

"Just as people will dash to the mountain peaks when a tsunami comes, we will rush to a safe area when the financial tsunami is sweeping the globe. We eye commercial projects, like office buildings, during the current financial tsunami," Pan said.

He said he is still bearish on the real estate market's performance as there is unlikely to be an immediate recovery even after government measures to boost a healthy and stable development of the sector. He expects the market to be sluggish for one to two years.

The prices of housing in 70 major cities across China's mainland grew at a slower pace last month. The average prices of housing gained 1.6 percent in October on an annual basis, against a 3.5 percent growth in September and a 5.3 percent rise in August.

Pan also noted it's hard for developers to obtain loans from commercial banks. The People's Bank of China, the central bank, has cut interest rates and down payment requirements on individual mortgages to boost buying from home buyers who intend to use the property for themselves.

Lu Zhengwei, an Industrial Bank chief economist, said the central bank was concerned over the property market and its impact on other sectors when it highlighted the sector in its third-quarter monetary policy report.

"However, the point is the central bank hasn't made it clear how it would stabilize the market," Lu said.

SOHO China is the biggest commercial landlord in Beijing's central business district. The real estate developer went public in Hong Kong in October 2007 in the largest initial public offering from China's private sector.