But the developer remains confident of achieving net profit of one billion yuan in three years
Stricter rules on the resettlement of Shanghai residents will be a huge expense for Shui On Land but should not prevent the newly formed company from achieving one billion yuan in annual net profit in two to three years.
Shui On Group plans to inject two Shanghai property developments into the company. A major expense will be finding new homes for at least half of the residents living on the sites to be developed.
Previously, developers could simply offer compensation to residents forced out of their homes.
'Relocation is the main part of our land costs, involving billions of yuan. Relocation has definitely delayed most of our projects [in Shanghai] by a few months,' Shui On Group chairman Vincent Lo Hong-sui said yesterday.
'If the tenants refuse to go, the government is sensitive about it now because of the Chau Ching-ngai scandal. Relocation is getting difficult but the government is still committed to our projects.'
