The central government is considering setting up an ultralarge
state-owned real estate group that would be one of the world’s
leaders in terms of assets. The State-owned Assets Supervision and
Administration Commission (SASAC) says that it would be organized
by restructuring existing enterprises.
The move is intended to optimize state-owned real estate
resources, enhance the competitiveness of major property developers
and peel off non-key businesses of existing enterprises to sharpen
their focus on primary operations.
The combined assets of the group would reach 100 billion yuan
(US$12.1 billion), according to a SASAC official, who requested
anonymity.
He said that Yang Shen, president of the China Real Estate
Association, and Gao Shangquan, president of the China Enterprise
Reform and Development Research Society, submitted the proposal for
the plan. It is currently being studied.
SASAC declined to disclose the details of the proposal or any
schedule for action.
The real estate megagroup, if formed, will be a part of the
central government’s
efforts to consolidate the state-owned real estate
sector.
In June, SASAC announced that central government-level SOEs
whose key businesses are not real estate should transfer their real
estate business assets to the Big Five state-owned real estate
developers.
The five giants are the China State Construction Engineering
Corporation, China Merchants Group, China Real Estate
Development?Group (CRED), China Poly Group Corporation and
Overseas Chinese Town Group Corporation.
Companies subject to the directive are free to negotiate their
own deals and are permitted to choose which of the Big Five they
wish to transfer their properties.
In addition to the Big Five, most of the 191 central-level SOEs
are currently operating property businesses.
The real estate assets to be transferred are estimated to be
worth 180 billion yuan (US$21.7 billion).
Industry watchers say that CRED is likely to be marked as the
controlling firm of the new group. Set up in 1981, CRED is the only
state-owned property group supervised by SASAC.
CRED spokesman Han Xusheng said in August that the
corporation’s
target was to realize assets of 100 billion yuan (US$12.1 billion)
through mergers and acquisitions.
Combined assets are expected to exceed 200 billion yuan (US$24.1
billion) through international cooperation with overseas
developers.
“We have
unique advantages, involving nationwide business networks, flexible
operating mechanisms and extensive experience in real estate
development,” said Han.
Huaneng Group, one of China’s five
largest power companies, has now transferred its real estate assets
to CRED.
(China Daily September 28, 2004)?