Shimao wants strategic investors for hotel unit
Shimao Property Holdings will set up a hotel investment company and seek strategic investors this year, before listing the unit in Hong Kong in the second half of next year, its chairman said.
Hui Wing-mau, the mainland's third-richest entrepreneur, said Shimao planned to sell between 20 and 30 per cent of the company to the investors.
'We are looking for investors in Hong Kong and overseas. We are looking for institutional investors and/or companies with hotel operating experience,' Mr Hui said in an interview on the sidelines of the Chinese People's Political Consultative Conference.
The Hong Kong-listed firm operates three Shanghai-based hotels with assets of more than 20 billion yuan (HK$21.95 billion). It is building a fourth in Shanghai and another in Nanjing. Mr Hui said the company aimed to operate 15 five-star hotels on the mainland by 2010.
Shimao also aims to expand its land bank by 40 per cent this year by taking advantage of reduced competition amid tightened bank lending. 'Macroeconomic measures to cool the property sector have made it easier for us to bid for land,' he said, adding the company aimed to raise its reserves to 35 million square metres this year from 25 million sq metres at the end of last year.
The central government's decision to restrict credit to the overheated property market has favoured developers that do not have to rely on borrowings to acquire land.
Since September year, developers were required to fully pay for land before construction could begin.
The company paid just under 10 billion yuan for sites in Hangzhou and Ningbo in Zhejiang province and Dalian in Liaoning province late last year. Mr Hui said he had told executives responsible for land bidding to keep the cost of land at less than 40 per cent of a project's expected selling price.
Many developers were burnt last year after making sky-high bids for land only to witness a sharp fall in property prices.
Although real estate prices in overheated markets such as Hangzhou, Shanghai, Guangzhou and Shenzhen had fallen substantially, Mr Hui said this was a normal adjustment and that he remained confident that prices would resume climbing sooner or later. 'With China's fast economic growth and tight land supply in cities, property prices are bound to rise in the long term.'