SOHO China turns to leasing amid sluggish sales

SHANGHAI -- China's leading real estate developer SOHO China has announced that the company will end its retail business and shift to bulk leasing amid falling sales and surging rents in a cooling housing market.

SOHO China has decided to bid farewell to the retail business and shift to bulk leasing in Beijing and Shanghai after repeated analysis and calculation, the company's CEO Pan Shiyi told a press conference for the company's semiannual financial performance in Shanghai on Thursday.

He said the company's 1.5 million square meters of property, mainly in Beijing and Shanghai, is expected to bring in annual rent of 4 billion yuan ($635 million) in five years.

Pan also said the rent will become SOHO China's major profit source in three years.

He announced that SOHO China will halve its original 23-billion-yuan sales target as the company's net profit for the first half of the year dropped 65 percent year-on-year to 613 million yuan. Its turnover in the first six months saw a 54-percent decrease.

SOHO China's latest decision, which Pan said none of its investors opposed, came amid tightened measures taken by the Chinese government to cool the country's runaway property sector and skyrocketing rents over the past two years.