SOHO Chief Says Housing Policies Are Biggest Risk to China’s Economy

26-Mar-2012

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An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. Oxstones.com also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.

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By , Mingtiandi,

In the latest sign of the pressures that China’s restrictions on residential real estate are putting on the nation’s property developers, SOHO China CEO Zhang Xin now contends that the greatest threat to the nation’s development comes from government policies.

In an interview with Reuters on Thursday, Zhang Xin contended that the residential property market across China has been “frozen” by government controls. In the discussion, the co-founder of developer SOHO China warned that risks generated by government policy, ostensibly meaning the restrictions that the government has put in place to dampen speculation in the housing market, pose the greatest threat to China’s economy.

Zhang was speaking to reporters following the company’s latest earnings report on Wednesday, where SOHO China reported a profit of RMB 1.42 billion for 2011, down 60 percent compared with the previous year, and below an analyst forecast of RMB 1.65 billion.

Zhang’s point of view on the economy is in marked contrast with the central government’s current focus, as Premier Wen Jiabao repeated on Wednesday that easing the current restrictions on housing in China “would cause chaos in the property market.” The government’s current line is that while rates have started to fall, residential real estate prices are still, according to Wen, “far from a reasonable level.”

Although SOHO’s Zhang had predicted to foreign journalists last September that the government’s current housing policies would be repealed within six months, she now admits that she cannot foresee when home-purchase restrictions will ease.

Despite the company’s current focus on office and retail real estate projects, SOHO clearly has not lost its taste for the residential deals which helped build it into one of China’s largest property developers, and made Zhang Xin and her husband/co-founder Pan Shiyi among China’s richest billionaires according to Forbes list of the 400 richest people in China. Zhang who made her fortune selling apartments and villas, believes that the government’s policies are misguided.

“There is no bubble,” Zhang said. “Very soon we will have a shortage of supply. This year and next year there is very little.”

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