New | Soho drops plan to sell Hongkou property, snared by China’s capital control rules

Soho China Ltd, the biggest commercial developer in the Chinese capital, said it’s been forced to abandon its sale of a Shanghai property to a “famous” buyer, becoming the latest company to be snared by the country’s capital control regulations.

Soho had to drop the sale of Soho Hongkou, an office-and-commercial project with 95,000 square metres of usable space in Shanghai, according to the company’s founder and chairman Pan Shiyi.

He was forced to cancel the deal as his plan to use the proceeds to fund an overseas investment became unfeasible under the government’s tough outbound payment controls.

“I wrote a letter to the buyers to apologise, and got their understanding,” Pan said during a Thursday press conference, after announcing the company’s 2016 financial results. “Considering that getting hold of renminbi cash is less valuable than holding the property, we decided to withdraw the deal” from sale, he said, without naming the buyer or disclosing the sales value.

Last July, Soho sold its Soho Century Plaza in Shanghai to Guo Hua Life Insurance for 3.22 billion yuan (US$467 million), or 76,700 yuan per square metre, a 21 per cent premium to its book value.

Hongkou is the most recent in a series of abandoned acquisitions, takeovers and mergers caught by China’s latest policy, tightened to deter capital flight amid the Chinese currency’s 7 per cent deterioration last year against the US dollar.