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Developer bullish about China market

Updated: 2013-12-19 08:14
By Wang Ying in Shanghai ( China Daily)

Developer bullish about China market
Customers enjoy the Christmas atmosphere last year in Shanghai Xintiandi. The commercial property project is a mixed-use complex comprising restaurants, bars and shops. It has become an entertainment and shopping spot in Shanghai. [Photo / Provided to China Daily]

Vincent Lo sees more opportunities in commercial property sector than homes

While Hong Kong business tycoon Li Ka-shing hit the headlines by selling more than 10 billion yuan ($1.65 billion) of his properties in the Chinese mainland recently, his counterpart Vincent Lo Hong-shui is shifting more focus on to the mainland's property market.

"I made a decision to exit all overseas investments seven years ago and only maintained our holdings on the Chinese mainland," said Lo, chairman of China Xintiandi (New Heaven and Earth in Chinese) Co, which owns and operates a series of premium commercial properties in China.

Sitting in an executive room of boutique hotel 88 Xintiandi Shanghai on an autumn afternoon, Lo wore his customary Chinese tunic, unlike most businessmen who opt for formal dark suits and ties.

Lo said he firmly believes China's property market will benefit from its economic development.

"Many people are concerned about sky-rocketing property prices at the moment, but I think so long as our economy is constantly growing, property values will still rise," he said, referring to the price of residential housing, which has been growing for 18 consecutive months since June 2012.

Statistics from the China Index Academy, the research arm of the nation's biggest real estate website, show that China's average home prices in 100 cities rose 10.99 percent in November from the previous year.

There are worries that people's spending power and quality of life will be eroded by the runaway home prices and rent inflation. Lo's suggestion is letting the government do its part to help poor families priced out of the market. That is to build low-rent apartments and provide housing aid for them.

According to Lo, the strongest residential developers will survive. Developers dare not put an outrageous price tag on homes if there is no demand.

Being a commercial real estate veteran, Lo gained his reputation among Chinese real estate developers with his Xintiandi project in Shanghai. Since 1999, Lo has headed Shui On Land Ltd, spending 1.4 billion yuan on the development of three hectares of narrow lanes lined with traditional houses in downtown Shanghai, located near the historical site where the Communist Party of China held its first meeting.

The Xintiandi project was developed into a new mixed-use complex comprising restaurants, bars and shops and soon became a popular entertainment and shopping spot in the city.

It is never easy to develop such a project from scratch, especially in the wake of the devastating Asian financial crisis. Developers then could hardly find any capital support from banks.

"At that time, my Hong Kong friends all called me a lunatic," said Lo. Instead of waiting for bank loans to support his project, Lo determined to use his own money.

Lo said he was eager to complete construction of the creative project ahead of the then upcoming Asia-Pacific Economic Cooperation meeting, which was scheduled to be held in Shanghai in October 2001.

However, his insistence in keeping the aged stones and architecture unchanged and making them part of the new project has increased the time and cost. But Lo's efforts paid off in later development.

His efforts finally paid off. Shanghai Xintiandi was named as one of the official recommendations to visit during the Asia-Pacific summit, and quite a few government heads and economies' leaders, including the Russian President Vladimir Putin, dined in Lo's club.

Since then, the project has become a landmark and a sightseeing spot in the country's commercial hub. Several other local governments across China have earnestly invited Lo and his company to develop similar projects in their cities. Successful followers after Shanghai's Xintiandi include Xihu Tiandi (Hangzhou), Chongqing Tiandi, Wuhan Tiandi and Foshan Lingnan Tiandi.

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