Fortunes of Asia's collapsing real estate
Wednesday, 26 November 2008
Andrew Farrell
India and China's biggest property owners watch their wealth evaporate. Investors pounced on shares of Chinese property developer Soho last year after founders Zhang Xin and Pan Shiyi publicly listed the company. The value of the husband-and-wife team's stake soared to $3.8 billion. Zhang said it was "probably a perfect moment."
A year of credit crisis later, it's more of a perfect storm. Company shares plummeted and Forbes now values Pan and Zhang's fortune at $1.2 billion. The sharp fall could have been even worse if not for Soho's healthy balance sheet, which had a billion dollars in cash at mid-year.
Our recently published lists of China and India's richest reveals Zhang and Pan are just two of the region's major property owners with collapsing fortunes. When we published our list of the world's billionaires in March, it included 15 Chinese real estate kingpins. When we recalculated their fortunes at the end of October, all of those fortunes were smaller, some by billions of dollars.
Their Indian counterparts can commiserate. Our list of the world's billionaires also included seven Indian real estate moguls. Our Indian rich list, published this month, shows their net worths each dropped as well.
The real estate markets in both countries are fizzling. Over the last five years, prices for homes in China doubled. Now the number of sales and home values are falling in many parts of the country.
Oversupply and a slowing Chinese economy are playing a role. Also hampering real estate values is China's ambitious stimulus plan to encourage the construction of new, affordable housing. Real estate investors worry the increased supply will push down prices further.
India's real estate market is following a similar course. It boomed over the past five years and now is slowing. High inflation and tightened credit are throttling the Indian economy. The restricted credit is also making it harder and more expensive for buyers to finance acquisitions
Nobody's more aware of the real estate market's woes than KP Singh. The Indian billionaire is still worth $7.8 billion, but that's just a fraction of his worth earlier this year. In March, we pegged his fortune at $30 billion. Shares of DLF, Singh's real estate company, fell steeply over the past year.
Singh announced Tuesday that his company was deferring some projects because of weakening demand and a credit crunch. "Demand has gone down so substantially that now [a] lot of projects are being closed down," he told a Reuters reporter at the India Economic Summit.
A sudden wealth evaporation also struck Yang Huiyan of China. In 2007, Yang Huiyan topped our list or China's richest people with a fortune of $16.2 billion. She's no longer at the top because her fortune fell to $2.2 billion.
Yang graduated from Ohio State University with a business degree in 2005. The same year Yang's father, Yeung Kwok Keung, gave her all his shares in Country Garden, the Chinese real estate company he co-founded. Yeung, the son of a rice farmer who bootstrapped his way to success, raised cattle and then worked as a bricklayer and contractor, which led him to build houses and work in real estate.
He built Country Garden into a giant by selling townhouses, villas and apartments to middle-income Chinese in the suburbs. He bought land cheap, filled it with houses and then sold to mostly middle-income Chinese families.
Sales were brisk and Country Garden stock soared. But the company got pounded by the country's real estate slowdown. According to Factset, shares are down 86% from yearly highs.
............
Forbes
India and China's biggest property owners watch their wealth evaporate. Investors pounced on shares of Chinese property developer Soho last year after founders Zhang Xin and Pan Shiyi publicly listed the company. The value of the husband-and-wife team's stake soared to $3.8 billion. Zhang said it was "probably a perfect moment."
A year of credit crisis later, it's more of a perfect storm. Company shares plummeted and Forbes now values Pan and Zhang's fortune at $1.2 billion. The sharp fall could have been even worse if not for Soho's healthy balance sheet, which had a billion dollars in cash at mid-year.
Our recently published lists of China and India's richest reveals Zhang and Pan are just two of the region's major property owners with collapsing fortunes. When we published our list of the world's billionaires in March, it included 15 Chinese real estate kingpins. When we recalculated their fortunes at the end of October, all of those fortunes were smaller, some by billions of dollars.
Their Indian counterparts can commiserate. Our list of the world's billionaires also included seven Indian real estate moguls. Our Indian rich list, published this month, shows their net worths each dropped as well.
The real estate markets in both countries are fizzling. Over the last five years, prices for homes in China doubled. Now the number of sales and home values are falling in many parts of the country.
Oversupply and a slowing Chinese economy are playing a role. Also hampering real estate values is China's ambitious stimulus plan to encourage the construction of new, affordable housing. Real estate investors worry the increased supply will push down prices further.
India's real estate market is following a similar course. It boomed over the past five years and now is slowing. High inflation and tightened credit are throttling the Indian economy. The restricted credit is also making it harder and more expensive for buyers to finance acquisitions
Nobody's more aware of the real estate market's woes than KP Singh. The Indian billionaire is still worth $7.8 billion, but that's just a fraction of his worth earlier this year. In March, we pegged his fortune at $30 billion. Shares of DLF, Singh's real estate company, fell steeply over the past year.
Singh announced Tuesday that his company was deferring some projects because of weakening demand and a credit crunch. "Demand has gone down so substantially that now [a] lot of projects are being closed down," he told a Reuters reporter at the India Economic Summit.
A sudden wealth evaporation also struck Yang Huiyan of China. In 2007, Yang Huiyan topped our list or China's richest people with a fortune of $16.2 billion. She's no longer at the top because her fortune fell to $2.2 billion.
Yang graduated from Ohio State University with a business degree in 2005. The same year Yang's father, Yeung Kwok Keung, gave her all his shares in Country Garden, the Chinese real estate company he co-founded. Yeung, the son of a rice farmer who bootstrapped his way to success, raised cattle and then worked as a bricklayer and contractor, which led him to build houses and work in real estate.
He built Country Garden into a giant by selling townhouses, villas and apartments to middle-income Chinese in the suburbs. He bought land cheap, filled it with houses and then sold to mostly middle-income Chinese families.
Sales were brisk and Country Garden stock soared. But the company got pounded by the country's real estate slowdown. According to Factset, shares are down 86% from yearly highs.
............
Forbes