Raising funds through a Hong Kong initial public offering might
become a trend for domestic real estate developers in the future,
industry experts have agreed.
"It is comparatively easier for domestic property companies to
get the approval for a Hong Kong IPO and generally speaking, Hong
Kong investors are more willing to invest in such stocks as they
are rather familiar with the real estate industry," Zhou Chunsheng,
a professor with Cheung Kong Graduate School of Business, told a
recent property forum jointly held by Sohu.com and www.focus.com,
one of the country's largest industry Websites. "Going public would
definitely help domestic developers as the industry is really
capital intensive."
In the long term, bank loans, private funds and IPOs will
probably become three major ways for domestic real estate
developers to finance their projects and expand their operations,
experts from Morgan Stanley and CITIC Ka Wah Bank concluded during
the forum.
Some big domestic property companies have already made their
plays, with Sino-Ocean Land Holdings Ltd surging in its Hong Kong
trading debut yesterday, according to Bloomberg News.
The stock rose 43 percent to HK$11 (US$1.40) at 2:52pm, valuing
the company at about HK$47 billion (US$6 billion). Sino-Ocean,
Beijing's biggest developer by area sold, raised HK$11.9 billion on
September 21 in an initial share sale priced at the top of its
range after Hong Kong individuals ordered 206 times the number of
shares reserved for them.
China Aoyuan Property Group, a developer in southern China, may
raise HK$3.64 billion yesterday after pricing a Hong Kong initial
public offering at the top end, according to two people with direct
information.
And Soho China Ltd, the largest developer in Beijing's CBD, is
seeking as much as HK$12.9 billion in its offering.
Earlier, Country Garden Holdings Co in April raised HK$12.9
billion in a Hong Kong IPO, making the company's 25-year-old owner
Yang Huiyan the richest woman on the Chinese mainland.
The Foshan, Guangdong-based company, the largest domestic
developer by operating income in 2005 which has a current land bank
of about 18 million square meters, was raising money to fund
projects ranging from apartments to townhouses and villas, as well
as to buy more building sites, the company said.
Chinese mainland developers are tapping capital markets through
share and bond sales to fund land purchases and construction. The
People's Bank of China, or the central bank, has so far raised
interest rates five times this year in a continuous effort to cool
inflation, which has then increased borrowing costs greatly for
real estate companies.
According to Bloomberg data, real estate-related Hong Kong IPOs
may fetch almost US$7 billion this year.
(Shanghai Daily September 29, 2007)
