"Last night in Soho...."

Most famously, it is the heart of London’s red light and theatre district. In Manhattan, it is a bijoux area “South of Houston” Street, while in Hong Kong it is an entertainment zone located in Mid-levels and bordering Sheung Wan within Central (i.e. “South of Hollywood” Road). It is also a hotel in Budapest, an observatory (Solar & Heliospheric) and a song (prefixed by “Last night in….”) by DDDBM&T.

But in China it is “Small Office, Small House” and the acronym for developer Soho China, which is the market leader in Beijing’s CBD with a stock market value of $3.7 billion. It’s CEO is Zhang Xin (her husband, Pan, is Chairman) and she rose from penniless sweat shop worker to become, at 45, one of the World’s richest ladies worth some $2.2 billion. On Thursday, I noted her reported comments dismissing the bears of China’s property boom. She hopes to prove sceptics wrong again this year by betting hundreds of millions of dollars on new buildings in Beijing and Shanghai. “I don’t see any bubbles” said Zhang. “The next few months will be a fantastic time to buy”.

And, in June, she paid Yuan 2.25 billion ($332 million) for a 22,500 square metre plot of vacant land on the Bund, which is Shanghai’s stately colonial-era waterfront strip, with echoes of 19th Century in Europe. Two weeks later in Beijing, she launched marketing of an innovative 485,000 square metre commercial, retail and entertainment complex which is shaped like interlinked cocoons. It will be designed by Pritzker Prize-winning architect Zaha Hadid.

Zhang says success in real estate has come down to guessing what the Government will do next. In June, she gave her prediction: “everyone was so pessimistic, and I was saying that in the next six months or a year, prices will go up again. My guess is that it is austerity now, but at some point it will become stimulus again”.

Stephen Roach, Asia Chairman of Morgan Stanley, agrees with Zhang. China’s property bubble is confined to luxury properties, he says. The lending curbs are successfully deflating high end speculators in the top 10 cities, which collectively account for just 6% of the total market. “It’s a micro bubble, not a macro bubble”.

As DDDBMT sang “you came into my life like rain upon a barren desert”.

Shanghai Composite:
Today: +0.53% at 2,672.53 at close
Last week: +0.8%
YTD: -18.5%

Hang Seng:
Today: +0.57% at 21,801.59 at close
Last week: +3.1%
YTD: -0.3%

Oil:
$81.27
Gold:
$1210.70
Euro/$:
1.3295

Headlines

• The so-called ‘gauge of investor fear’ falls to lowest level since 2006
• Industrial production and trade data this week expected to confirm slow down
• 2087 companies have been ordered to shut outdated plants – which may inhibit economic growth
• “No hard landing” says Nobel Prize-winning economist Joseph Stiglitz in TV interview
• State researcher sees economy growing at 10 to 11%
• More economic stimulus would cause bubbles, says People's Daily newspaper
• Yuan Forwards rise most in two weeks on US recovery doubts
• China plans $738 billion of new energy investment
• Average house prices declines in Hainan Province
• Gemdale’s property sales drop 42% for first seven months
• Finance Ministry sells three-year local govt. debt at 2.37%
• HSBC to sell its first Yuan certificates of deposit in HK
• Wheat prices fall
• Landslides kill 127 in Northwest