SOHO China in talks to buy more land

BEIJING Wed Sep 2, 2009 2:54pm EDT

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BEIJING (Reuters) - Cash-rich commercial property developer SOHO China (0410.HK) is in talks to buy more land in Shanghai and Beijing, its chairman said on Wednesday.

SOHO China -- one of several developers replenishing land banks as the Chinese real estate market rebounds -- paid 2.45 billion yuan ($359 million) last month to acquire a prime Shanghai office building from Morgan Stanley (MS.N), its first venture outside China's capital.

"We are still in other talks. The direction has not changed," Pan Shiyi said at the Reuters China Investment Summit. The firm has no plans to raise additional funds, he said.

SOHO China is expanding to take advantage of property valuations that have fallen to attractive levels after a deep downturn since late 2007. Now prices in China are rising again and pushing developers to act more quickly.

China Vanke Co Ltd 000002.SZ, the country's No 2 property developer, announced on Thursday a plan to raise up to $1.6 billion by selling new shares to fund expansion in a property revival, joining rivals Gemdale Corp (600383.SS), China Merchants Property 000024.SZ and Poly Real Estate Group Co (600048.SS).

Pan said his firm had no need to issue bonds or additional shares to finance its acquisitions, as strong sales this year and credit lines from two Chinese banks gave it enough cash.

Earlier this year, Bank of China (3988.HK) and China Merchants Bank (3968.HK) each gave SOHO China 10 billion yuan loans at rates much cheaper than current financing costs, Pan said. He did not specify the interest rates.

That included, SOHO China has built up a war chest of $1.9 billion, Pan told Reuters in June.

The company's year-to-date sales reached over 7 billion yuan by Aug 25, exceeding its annual target for 2009.

"We have set a new target and are trying to reach it," Pan said, but declined to give further details.

Pan said he expected housing prices would continue to climb in Shanghai and Beijing, after beginning their rebound in March, but within a limited range.

"But I think the price has peaked in downtown Shanghai," Pan said.

A shortage of supply in major cities like Beijing and Shanghai drove down transactions in the past two months, supporting prices.

($1=6.830 Yuan)

(Reporting by Langi Chiang and Simon Rabinovitch; editing by John Stonestreet)

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