China Resources Beijing Land, the mainland property arm of China Resources Enterprise (CRE), wants to increase its rental income by 40 per cent over the next five years. Chairman Frank Ning Gaoning said that current annual rental income was 20 million yuan (about HK$18.6 million) and rental rates were rising at 10 per cent a year. The company, spun off last November from CRE, the listed arm of China's Ministry of Foreign Trade and Economic Co-operation, holds 1.2 million square feet of gross floor area for investment. It had 12 sites that could be developed in Xidan district in Beijing, Mr Ning said. He said that China Resources Beijing Land would develop five of the sites, building shopping arcades and offices that would be retained for long-term investment. The company would continue to focus on projects in the capital, building for domestic clients, Mr Ning said. '[We] cannot see how it is advantageous for us to go into the Shanghai and Guangzhou property markets . . . because Chinese property markets are very localised,' he said. The company has 37.67 million to 43 million sq ft in gross floor area under construction, an amount that could take between six and seven years to complete. 'This year, we will complete the construction of about 32.29 million sq ft of gross floor area and we will replace the amount used,' Mr Ning said. He said Beijing Land was looking at a four million sq ft site in Xidan district, which is occupied by a factory producing specialised steel. While 85 per cent of Beijing Land's flats are sold to mainland enterprises and government departments, which allocated them to their workers, the remainder are taken by individual buyers. Mr Ning said prices of flats within Beijing's second and third ring roads were between 929 yuan and 1,114.8 yuan per sq ft. Those beyond the third ring road cost between 464.5 yuan and 650.3 yuan per sq ft. Although these prices may be beyond the reach of the masses, Mr Ning said that government intervention could not make the situation more equitable. He said that prices should be allowed to fluctuate freely. 'This is not [something] that can be solved by administrative measures. It has to move according to the development of the economy,' he said.