HONG KONG: Beijing-based developer SOHO China is looking at acquisition opportunities amid the deflating property market.

SOHO China Executive Officer Zhang Xin yesterday told reporters that the company will step up the pace to acquire new projects this year after asset values plummeted more than half since the outbreak of the financial crisis.

"It is a good timing for acquisition," Zhang said. "The company is in talks with foreign property funds and cash-strapped local developers interested in selling their commercial projects."

The financial turmoil took its toll on many mainland developers. Many were forced to sell their properties in a hurry.

Zhang believes some deals can be completed by the end of the year, but she refused to predict how many deals would be completed within the year.

When the mainland property market overheated between 2006 and 2008, SOHO China appeared hesitant in its land purchases by comparison with its peers.

Last year, SOHO China purchased only two projects - Chaoyangmen SOHO and Zhongguancun SOHO - for an aggregated 6.43 billion yuan.

The company remained in 'hibernation' over the past few years. It took a prudent course after asset prices shot up inordinately during the housing boom, Pan Shiyi, SOHO China Chairman, said.

In the face of the market restructuring, Zhang said that the company will keep an eye on commercial projects with prime locations in Beijing and Shanghai.

"The company currently has 10.7 billion yuan cash-on-hand and 20 billion yuan worth of credit. The company's financial clout is strong enough to bankroll the spending spree."

Commenting on the market outlook, Pan believed that the property market hasn't got back on its feet yet. The increasing supply in social housing significantly created a downside pressure on housing prices.

The company recorded a 92 percent gain in pre-sales to 7.7 billion yuan in 2008. Amid this amount, 4.3 billion yuan will be booked in 2009 and 3.3 billion yuan will be booked next year. The average selling price rose 36 percent to 48,718 yuan per square foot.

Meanwhile, the company's net profit was 399 million yuan, against 1.97 billion yuan in 2007. Zhang attributed the drop to the delay of Sanlitun SOHO. The completion of the project was postponed by six months because of the Olympic Games.

The SOHO project booked1 billion yuan in profit from sales, which will roll over into next financial year.

Pan declined to pinpoint the sales target for 2009 because of market uncertainty, but he was confident that the gross margin could maintain at 50 percent. The company has no intention of slashing selling prices.

Besides, Pan said, the 130 percent-increase in dividend payout will not pose a burden on the company's financial stability.

Shares of SOHO China yesterday closed at HK$2.66, down 2.56 percent.

(HK Edition 03/14/2009 page2)