HONG KONG, March 4 Property developer SOHO China
Ltd posted a 47 percent drop in second-half net
profits on Tuesday as a strategic shift towards renting
properties instead of selling them reduced revenues.
The Beijing-based developer also expressed concern about the
rising land prices in China, which it said was squeezing
Soho China's net profit for July to December last year was
5.3 billion yuan ($862 million), according to Reuters'
calculations based on full-year results.
That beat the median forecast of 1.99 billion yuan by 15
analysts, according to Starmine's SmartEstimate, as the company
locked in the sale of a Beijing plaza earlier than expected.
The figure compared with a net profit of 2.09 billion yuan
in the previous six months and 9.97 billion a year earlier.
Soho China announced in 2012 it was changing its business
model to build-and-hold from build-and-sell in order to maintain
a more stable income stream from rents rather than property
In its earning statement, the company said it was worried
about "troubling signs" in the residential real estate market,
saying land prices had become too expensive.
"We are concerned about some troubling signs in the
residential property sector. While returns are being squeezed,
mounting land cost continues to create "land kings" one after
another, which is a deviation from normal market rules," SOHO
chairman Pan Shiyi said in a statement.
"This phenomenon is especially pronounced in second and
He said the company will continue to focus on the
development, leasing and operations of prime office properties
in central Beijing and Shanghai.
Last Friday, SOHO China said it was selling two commercial
buildings in Shanghai for a total of 5.23 billion yuan ($853
million), lower than the initial asking price, at a time of
excess supply in the city.
($1 = 6.1462 Chinese yuan)
(Reporting by Clare Jim; Editing by Anne Marie Roantree and