16 October, 2006. HURUN REPORT RELEASES PROPERTY RICH LIST, A PART OF THE 2006 CHINA RICH LIST SERIES

• SIX OF CHINA’S TEN RICHEST INDIVIDUALS ARE PROPERTY DEVELOPERS
• 56-YEAR OLD XU RONGMAO IS TOP PROPERTY TYCOON WITH US$2 BILLION FORTUNE
  

Xu Rongmao’s Story
In July 2006 Shimao listed its core business in Hong Kong giving it a total market cap of US$3.1 billion, when combined with its two smaller listed vehicles. Born in Fujian to a medical family, Xu started out trading textiles before heading down to HK and later onto Australia. In the early nineties, Xu returned to China catching the real estate boom first in Fuzhou, then expanding to Beijing in 1995 and Shanghai in 2000. Today, Shimao has developments across the country and has even expanded to Russia. In Shanghai, Shimao is currently involved in the development of a number of five-star hotels.

Property greatest wealth creator for China
Property is still king with 26% of the 500 from the China Rich List listing it as one of their key industries, followed by manufacturing (20%). The percentage of property tycoons has diminished over the past two years from 28% last year and 45% in 2004.

“Urbanization and ever-increasing household incomes have continued to be the key drivers for wealth creation in China’s property sector,” says Rupert Hoogewerf. Property may be considered an ‘old’ industry in the Western world, but in China it is anything but especially after mortgages became readily available in 1997 resulting in a boom in residential sales.”. Making IT look sluggish by comparison, China’s building boom has been the key driver behind China’s explosion of wealth. It seems unthinkable that twenty years ago land had only negligible value.

In the property sector, private companies have a strong competitive advantage, and are blipping onto the radar screens of large state-controlled developers, such as Vanke.

Impact of capital markets
The past year has seen a surge in Mainland property companies coming to market. Amongst the top ten richest property tycoons, four of them listed in the past year. These include R&F, Agile and Shimao in HK, and Yanlord in Singapore. Over the past year Hopson Development saw its share price rise nearly four-fold on the back of strong demand from institutional investors.

Size matters
In 2002 the government passed a law requiring land to be sold at public auction, with a view to minimizing the possibility of corruption from a private sale. This has created a clear polarization of China’s property developers, with a few large developers at the top and then a host of smaller developers. The largest listed property company on our list is R&F Properties with a market cap of US$3.9 billion, followed by Shimao with US$3.1 billion.

Interesting property tycoons

• Low-key Zhu Mengyi in June donated US$120 million worth of shares in his HK-listed Hopson Development to charity for use in an education fund. Last year Hopson was the second best performing overseas Chinese listed company rising 383% (year-end 30 June 2006) after strong interest from institutional investors.
• Over the past two years Sun Hongbin has ramped up Sunco to try and catch up the largest developers, but succumbed to a cashflow crisis after paying high prices for parcels of land.
• Low-key Huang Junqing is the brother of Huang Guangyu, the founder of GoMe and the second richest person in China. Born into a poor family in South China, the brothers founded the retail business in 1987, but split the property and retail business in 1993.
• Country Garden (Chinese name Biguiyuan), a property developer in Guangdong, created ten individuals on the rich list (six surnamed Yang, a popular local village name), each with US$100 million.
• One person missing from the list is 85-year old property tycoon Yu Pengnian, who last year donated US$250 million (the bulk of his wealth) to a charity doing cataract operations, topping the Hurun Report China Philanthropy List in April.
• Cashing out: Zhou Qingzhi sold his property assets to Vanke for US$400 million.
• Well-connected Chen Lihua started with property in HK in the early eighties, before returning to China ten years later to set up what is today China’s most exclusive private club. Chen is passionate about sandalwood and has built her own private museum to house her collection.
  

Some interesting stats

Shanghai boats the highest number of China’s top fifty property tycoons with fourteen individuals, followed by Guangdong with ten, Beijing with nine and Zhejiang with six.

Fourteen of the fifty were born in Guangdong, followed by ten in Zhejiang, six in Jiangsu and four in Shanghai.

Average wealth of the top fifty property tycoons is US$500 million. As a group, the top fifty have US$21 billion.

Methodology
The Property Rich List is a sublist of the Hurun Report 2006 China Rich List series and only takes into account wealth generated from the property sector. In the case of Zhu Mengyi, for example, Hurun Report subtracted his non-property assets (primarily a US$300 million investment in Shanghai Electric) when calculating his wealth for the purpose of the Property Rich List.

Valuing the wealth of China’s Rich is as much an art as it is a science. Our team of researchers has - for the eighth year running - traveled the length and breadth of the country cross-checking information with entrepreneurs, industry experts, journalists, bankers, and regulators, as well as previous years’ databases. The cut-off date for valuation of listed companies was August 31, 2006. For non-listed companies we valued by comparing them with their listed equivalents using prevailing industry P/E ratios. This list relates to Mainland China only. For the purposes of this list, we define Mainland Chinese as someone who was born and brought up in China, no matter what passport they might hold today.

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