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| Real Estate Still Appeals Despite Tax |
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Most Hong Kong-listed property developers surveyed yesterday say China's new land appreciation tax will not seriously hurt their mainland operations and would not slow their pace of investment. Nearly 90 percent of 26 Hong Kong-listed companies agreed "their level of mainland real estate investments will not be affected by the tax," according to a survey conducted by international accountant Deloitte Touche Tohmatsu. Most of them said they have confidence in the mainland's real estate sector, while 33 percent said they would increase their investments by more than 100 million yuan (US$12.8 million). There are now 118 companies listed in Hong Kong that have property or hotel operations on the mainland. Some developers said they have already set aside funds to pay the tax because the industry has known it would be introduced one day. It becomes compulsory next month. Neo-China Group says it has made a 100 million yuan provision for commercial projects in Tianjin. "The tax is mainly targeting projects with high marginal profit," said Neo-China Vice President Ronald Chan. "Most of our residential projects are low-end and small size, so the impact is very light on us." Tam Lai-ling, chief financial officer and deputy managing director of Hopson Development Holdings, said the company has written off 340 million yuan (US$43.7 million) over the years so "enforcement of the land appreciation tax does not cause a sudden shock to the company." A spokesperson of New World China Land also shrugged off the impact by noting "the policy has existed for a long time and we started to make provisions in1993." Albert Tong, executive director of Tomson Group Ltd, said that the impact is very limited on his company as well. "Since the company is free of debt and most of our projects are for lease, our business will withstand the effect of the measure," Tong said. The land appreciation tax was introduced in 1993, but was collected on a voluntary basis. The central government said on Tuesday that it would be charged from next month on appreciation of the market value of land left undeveloped for three years after the measure takes effect. The move is widely seen as an effort to curb the mainland's overheating property market and regulate developers who acquire a lot of land but do not develop it for years. Analysts generally believed the tax would drag down profits as much as 60 percent. But big developers may better withstand the impact due to their robust revenues. (China Daily January 20, 2007) |
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