Shui On To Delay Plan To Build Resorts In China

Source : The Business Times, October 30, 2008

GLOBAL FINANCIAL CRISIS

(HONG KONG) The global credit squeeze has prompted Shui On Land to delay plans to build resorts in four cities in China's Yunnan province.

Mr Lo: 'Under the circumstances, it's just not realistic to expect us to obtain sufficient finances.'

'Under the circumstances, it's just not realistic to expect us to obtain sufficient finances,' said Vincent Lo, chairman of the Hong Kong-listed, Shanghai-based developer.

The billionaire was speaking in an interview in the western Chinese city of Chongqing yesterday.

The projects in Kunming, Diqing, Lijiang and Dali, costing as much as 50 billion yuan (S$10.9 billion), may be delayed until the second half of next year, Mr Lo said.

Central banks around the world are trying to thaw frozen credit markets and avert a global recession. China's economy, the world's fourth biggest, is under threat from weaker demand for exports and slumping property sales that may undermine investment.

Global credit and stock markets 'need to settle', Mr Lo said.

The 60-year-old is worth US$2.5 billion according to a Forbes magazine ranking of the world's richest people, published in March. Market declines may have trimmed that number.

He is the sixth son of Lo Ying-shek, the late founder of Hong Kong-based developer Great Eagle Holdings.

Shui On's shares fell 1.6 per cent to HK$1.26 in Hong Kong yesterday. The stock has lost 86 per cent this year, more than the 54 per cent decline in the benchmark Hang Seng Index.

China Vanke Co, the country's largest publicly traded real estate developer, this week reported a drop in third-quarter profit amid what it described as a housing market 'recession'.

Mr Lo was speaking at a ceremony to mark the start of construction of one of the office towers at its eight billion yuan Chongqing Tiandi project.

Hong Kong-based Winnington Capital may raise its stake in the project to 50 per cent from 20 per cent, according to chief investment officer Kenneth Hung. The fund is raising US$1 billion to invest in Chinese property, Mr Hung told reporters after the ceremony yesterday.

In May, Winnington bought 25 per cent of a Shanghai residential project from Shui On for US$162 million and may buy another 25 per cent, Mr Hung said. It may also invest in a Shui On project in Foshan, he said.

Shui On, known for the Xintiandi office and entertainment complex in Shanghai, has been expanding outside of eastern China. In May, the company said that it will invest in a software park in the north-eastern city of Dalian and it's also building replicas of the Xintiandi complexes in Wuhan, Hangzhou, Chongqing and Foshan. -- Bloomberg