Developers look for new capital sources

After months of uncertain housing policy, developers held a conference over the weekend to look for other sources of revenue and capital.

Building more integrated complexes, shopping malls, office buildings and recreational plazas together will be our business model in the future, said Liu Xiaoguang, general manager of the Beijing Capital Group (BCL).

The First Annual China Real Estate Forum held by the China Europe International Business School was held in Beijing to give developers a chance to share ideas.

BCL, whose major businesses used to be high-end residences, said in March that it would build five more outlet malls within three years, and the total number will reach 30 in five to 10 years.

Commercial developments at present account for around 20 percent of our total properties, but the percentage will increase to 50 percent sooner or later, Liu told the Global Times on the sidelines of the forum.

Hu Baosen, chairman of Central China Real Estate Limited, said that his company's commercial properties sales income would account for around 10 percent of its total sales income.

Huang Jincan, the president of Gemdale, also showed confidence in commercial properties because of the burgeoning domestic consumption.

The developers who specialize in residential property have begun to expand to commercial developments because of the government's unclear policies.

But success is not guaranteed in the commercial ventures yet.

Developing and managing commercial properties used to mean heavy losses in the initial period, and a lot of capital are needed, said Liu.

Facing constricted capital channels due to the weak housing sales and tightening on loans, developers have been forced to find new ways to finance.

We will focus on real estate financing in the future, said Huang Jincan of Gemdale.

Gemdale and USlaunched the first real estate investment fund run by a developer on the mainland this April.

Liu Xiaoguang of BCL illustrated seven financing channels including cooperating with private equity firms and issuing bonds overseas.

Domestic funds and overseas property investment funds will be some of our major financing channels, Liu said.

Source: Global Times