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1. Teaching Note | HBS Case Collection | January 2017

   SOHO China: Transformation in Progress

   Charles F. Wu and Alexander W. Schultz

   In 2016 against the backdrop of a challenging Chinese macroeconomic environment, SOHO China, the largest owner and developer of Class-A real estate in Beijing and Shanghai, was struggling to convince analysts of the merits of their new “build-to-hold” strategy. Founded as a merchant builder, the company went public in 2007 raising a record USD 1.9 billion, but the firm, led by Zhang Xin, refocused in 2012 towards a “build-to-hold” strategy in an effort to capture the long-term value of their properties. Ms. Zhang also saw an opportunity to capitalize on the rapidly growing “shared office” trend developing their own ‘3Q’ coworking product placing these centers in their newly held buildings. Despite 3Q’s initial success and the “build-to-hold” strategy beginning to bear fruit, SOHO’s stock price was still near record lows. How could Zhang Xin educate the stock market to reward SOHO’s share price and acknowledge the successful transition? Would these strategic decisions be sufficient to steer SOHO China through new economic hurdles? Is 3Q enough to buoy SOHO’s performance and bring them into the next phase of growth?

   Keywords: merchant builder; real estate development; public markets; China; shared office space; Growth and Development Strategy; Property; Construction; Stocks; Financial Markets; Marketing Strategy; Real Estate Industry; Construction Industry; China;

   Citation:

   Wu, Charles F., and Alexander W. Schultz. "SOHO China: Transformation in Progress." Harvard Business School Teaching Note 217-034, January 2017.  View Details

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2. Case | HBS Case Collection | September 2016 (Revised January 2017)

   SOHO China: Transformation in Progress

   Charles F. Wu

   In 2016, against the backdrop of a challenging Chinese macroeconomic environment, SOHO China, the largest owner and developer of Class-A real estate in Beijing and Shanghai, was struggling to convince analysts of the merits of its new “build-to-hold” strategy. Founded as a merchant builder, the company went public in 2007, raising a record US$1.9 billion, but the firm, led by Zhang Xin, refocused in 2012 on a “build-to-hold” strategy in an effort to capture the long-term value of its properties. Zhang also saw an opportunity to capitalize on the rapidly growing shared-office trend, developing the company’s own 3Q coworking product and placing these centers in its newly held buildings. Despite 3Q’s initial success and with the “build-to-hold” strategy beginning to bear fruit, SOHO’s stock price was still near record lows. How could Zhang Xin educate the stock market to reward SOHO’s share price and acknowledge the successful transition? Would these strategic decisions be sufficient to steer SOHO China through new economic hurdles? Is 3Q enough to buoy SOHO’s performance and bring it into the next phase of growth?

   Keywords: China; REIT; real estate; shared office; coworking; public company; NAV; Macroeconomics; Going Public; Transition; Growth and Development Strategy; Real Estate Industry; China;

   Citation:

   Wu, Charles F. "SOHO China: Transformation in Progress." Harvard Business School Case 217-023, September 2016. (Revised January 2017.)  View Details

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