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Business Tycoon Cancelled Transaction Due to China’s Currency Control

Pan Shiyi, Chairman of the Board of SOHO China stated that his company had to cancel its plan to sell a property due to China’s currency control. Pan made the statement on March 23, at the SOHO China’s news conference to release 2016 financial data.

SOHO China is a large real estate developer in China.

SOHO China sold its SOHO Century Plaza in Shanghai for 3.3 billion yuan (US$ 470 million) on July 29, 2016, at 76,700 yuan per square meter. Pan said that the company would sell another three non-core business projects: Lingkong SOHO, Hongkou SOHO, and SOHO Tianshan Plaza.

SOHO China even reached an agreement on the price to sell Hongkou SOHO to a famous company. Pan planned to use the proceeds to buy an overseas investment. However, due to China’s currency control, the company realized that it could not exchange the Renminbi proceeds for a foreign currency in order to buy an overseas investment. However, in China, holding Renminbi is not as safe as holding real estate (Renminbi deflates but real estate prices keep rising). So his company cancelled the sale.

SOHO did not sell any of those three properties.

Source: The Paper, March 23, 2017