Soho China will shift its strategy from the “build and sell” model to “build and hold” as it expects a promising growth in rent and capital value of prime office buildings in Beijing and Shanghai. The Beijing-based developer intends to hold prime office and retail spaces totaling 1.5 million sq m — 1.12 million sq m in Shanghai and 380,000 sq m in Beijing — and expects annual rental income from existing portfolios to exceed CNY4 billion in five years. “We hope rental income will become a major source of our profit in three years while sales will become supplementary,” said Pan Shiyi, Chairman of Soho China. Beijing posted a 73% jump in office rents while Shanghai’s rose 18% over the past 18 months, according to CB Richard Ellis. For the six months ended 30 June, Soho’s turnover dived 54% to CNY1.22 billion, as no new projects were completed for booking during the period. The net profit attributable to equity shareholders plunged 65% annually to CNY613 million. The company expects that rental income will replace sales revenue to become the major profit contributor in three years, and that in five years’ time, annual rental income will exceed CNY4 billion. By the end of the first half-year, the company had CNY15 billion of capital in hand, and its net gearing ratio stood at 20%. Pan said the two factors made the company capable of making the strategic decision, and that the company would raise its gearing ratio to 30% to complete the transition. In line with the transition plan, the company cut its sales target of CNY23 billion for this year by half to CNY12 billion. Contracted sales were CNY6 billion by the end of the first half. For the six months ended June, Soho China posted a 54% drop in turnover to CNY1.22 billion compared with a year earlier.