Soho China, the Beijing-based property developer planning a Hong Kong initial public offering, will keep its focus on the capital city as it expects prices there to remain strong even after the Beijing Olympic Games next year. 'We have been looking around the country for business opportunities for years, but at the end of the day we feel nowhere else but Beijing could offer us safe and stable returns in the foreseeable future, as in the next three to five years,' chairman Pan Shiyi said. Mr Pan said he did not rule out investing in other key mainland cities, but the size should be substantially smaller than in Beijing. Soho China plans to raise up to US$1 billion from the offering to fund expansion and may start investor presentations as early as this week, sources said earlier. Soho China's website said that 20 per cent of all property projects and 33 per cent of sales were in Beijing's central business district. The company announced earlier this year that it bought a parcel measuring 470,000 square metres in Beijing's Sanlitun area, famous for its bars and restaurants. Some analysts said Soho China's focus in Beijing would limit its land reserve. Mainland developers such as China Vanke and Poly Real Estate own large land banks around the country. However, Mr Pan said he was not concerned about expanding land reserves. 'When we need it, we can find a way to get it. We don't purchase land with the purpose of stocking up land.' Mr Pan said some developers stocked up sites 'simply to create hype'. 'As a developer, when you are unable to perform and make profit by selling properties, what would you do to improve your stock's performance? The easy answer is to stock up on land and create hype or an illusion for investors.' Beijing's property market has grown at double-digit rates in recent years on anticipation of the city's hosting of the Olympics and rising household income. To provide more homes for lower-income families, the Beijing government sold several large parcels to developers on the condition that they build budget flats at officially set prices. The State Council is also expected to revise key policies on commercial-residential buildings to guarantee lower-income families a decent place to live. Mr Pan said that although the government meant well, it may have made housing development a little too political. 'When market rules do not apply, risks can be suddenly out of your control,' he said. 'We may gradually shift our focus to high-end commercial buildings, where demand is still high and profit margins are huge.' A former oil company employee, Mr Pan started Soho China in 1995 with his wife Zhang Yin, a former researcher at Goldman Sachs. The couple ranked 237th in Forbes magazine's list of 400 richest mainlanders last year.
