Bullish Shimao doubles sales goal for mainland property market
Shimao Property Holdings has cast a vote of confidence in the mainland's real estate market, aiming to double its property sales to more than 17.8 billion yuan next year.
With its expansion into second- and third-tier cities, the company maintained strong property sales while selling prices for its projects managed to rise even after Beijing imposed more macroeconomic austerity measures to cool speculation, said chairman Hui Wing-mau, the mainland's second-richest man.
'We expect property sales to reach 8.9 billion yuan this year and to double next year,' said Mr Hui.
'You may probably hear a lot of news about the slowdown in the [property] markets in Shenzhen or other southern cities. But the impact [of the measures] is not serious in second- and third-tier cities.'
The central bank and the China Banking Regulatory Commission announced a mortgage policy on September 27 requiring buyers of second homes to make a 40 per cent down payment, an increase from 30 per cent.
Second-home buyers are also required to pay a higher interest rate than first-time buyers.
Based in Shanghai, Shimao has extended its presence to other major cities including Beijing. The company also has developments in second- and third-tier cities such as Changsha, Chengdu, Chongqing and Suzhou.
Mr Hui said the company would increase its land reserves in the pan-Bohai Rim - the latest economic zone to receive the central government's blessing to forge ahead in the next five years.
The zone includes Beijing, Dalian, Shenyang and Tianjin.
The land bank expansion would be carried out through land auctions and acquisitions of smalle property companies, said Mr Hui.
Beijing's credit-tightening measures make it difficult for small property companies to survive, creating buying opportunities for Shimao, according to Mr Hui.
He spoke after an extraordinary general meeting of Shimao shareholders, in which minority shareholders approved its proposed injection of 11 retail and commercial properties into Shanghai-listed sister Shanghai Shimao.
In return, Shimao will take a 74 per cent stake in Shanghai Shimao.
Mr Hui said the asset acquisition would provide Shimao Property with new fund-raising channels in the A-share market and bond market.
The developer would turn the A-share company into a commercial real estate concern, he said.
Against the grain
The firm's expansion into second- and third-tier cities is paying off
Shimao expects property sales to double next year to, in yuan: Yuan 17.8b
