Xintiandi developer Shui On sees possible ‘golden era’ after 58% profit drop amid Shanghai lockdowns
Profits at Shui On Land, the Hong Kong-based developer of Shanghai’s popular Xintiandi entertainment district, plunged 58.6% in the first six months of the year to 450 million yuan as related lockdowns to Covid hurt rentals and further constriction.
Revenue from the company, chaired by billionaire Vincent Lo, fell 63% from a year earlier to 4.4 billion yuan, Shui On said in a Hong Kong Stock Exchange filing. Thursday after market close. Its shares have fallen 23.6% over the past year.
“The ongoing difficult global macroeconomic environment, the Covid outbreak and subsequent lockdowns in Shanghai and other major cities have impacted all aspects of China’s economy and its real estate market,” Shui On said.
China’s overall GDP growth fell to 0.4% in the second quarter from a year earlier; in Shanghai, where millions of people experienced lockdowns of varying lengths between April and June, GDP fell 5.7%.
Shui On said the near-term business outlook faces uncertainties. “The Chinese economy is facing considerable headwinds amid a highly uncertain geopolitical environment, strained U.S.-China relations and tighter monetary policy in advanced economies,” he noted.
China’s real estate sector faces other problems related to over-indebtedness, the developer noted. “The real estate sector debt issue will take time to resolve. However, the government has the political means and the experience to manage the process of restructuring the debt of promoters and to solve the problem of suspended projects.
Xintiandi, an adjoining lake and adjacent park are part of a larger development area called “Taipingqiao” launched in 1996 by Hong Kong developer Shui On Land. Its 22 blocks are part of a central Shanghai strip popular among Hong Kong developers in the 1990s, when the city was at the start of the country’s post-Mao economic boom. The then dilapidated residential area covered in distinctive “longtang” residences and stone-framed “shikumen” gates has become a fashionable and award-winning landmark since its completion in 2001.
On Thursday, Shui On was brilliant in his assessment of the country’s investment prospects at a time when many developers are struggling.
“Although the immediate outlook is less than favourable, the impending market correction should allow us to acquire assets in prime locations at attractive prices during what could be a golden period for new investments,” he said. -he declares.
As for Shanghai, Shui On said, “Shanghai’s competitiveness and role as a global economic hub remain untouched by the Covid-19 lockdown. The government will continue to strengthen its relationship with its global trading partners and increase its international influence in science and technology innovation.
Time will tell us.
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