SOHO China: Transformation in Progress

Charles F. Wu; Alexander W. Schultz

Teaching Note | HBS Case Collection | January 2017

SOHO China: Transformation in Progress

by Charles F. Wu and Alexander W. Schultz

Abstract

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;

Language: English

Format: Print

8 pages

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Citation:

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

Nathalie Parizat and her husband, Hugo, were contemplating a new real estate investment. For two years they had been frustrated by and lamenting their situation of paying high rents to third parties while the couple had idle cash in the bank. They also were convinced that Brooklyn's rising rents and property prices were showing no signs of abating. The couple had $100,000 in savings, which they intended to combine with mortgage financing to purchase a residential income-producing building. Nathalie focused her search on Brooklyn, narrowing it down to Williamsburg, where she thought there was better potential to make a good return on their investment. She had quit her full-time job and was planning on managing the building and the renovation—should it be needed—herself. Was she ready to take on this challenge or was she in over her head?

Case | HBS Case Collection | September 2017 (Revised December 2019)

Miami Price: Bidding on an Iconic Transit-Oriented Development Site

Charles F. Wu, Aaron Stolear, Vitali Bourchtein and Sayiddah Fatima McCree

13th Floor-Adler, a partnership of 13th Floor Investments and Adler Group, was compiling a response to a Miami-Dade County Request for Proposal (RFP). The RFP's prize was the opportunity to develop a 7.5+/- acre parking lot, adjacent to a heavy-rail rapid transit station, into a Transit-Oriented Development (TOD) in Miami. To win, 13th Floor-Adler had to submit a proposal that was the "highest and best use" for the land, catered to the County's demands for workforce housing, provided a market return for investors and compensated the County for the use of the land.
Throughout its history, Miami has been subject to a number of real estate booms and busts. Intricate expertise of Miami’s demand drivers were necessary in order to succeed. Arnaud Karsenti (MBA 2006), founder and Principal at 13th Floor Investments (13th Fl), with over $1B worth of completed transactions in the South Florida market, had this well of expertise. Furthermore, the partnership with the Adler Group, headed by Michael M. Adler, provided additional credibility for the proposal due to their 50+ years’ experience in Miami.
At "Link @ Douglas," can Karsenti and his team be "placemakers" creating a true live, work, and play environment, deliver market returns to investors and create a winning proposal that caters to the demands of the Miami-Dade County officials?

Keywords: land valuation; real estate development; real estate; land markets; land investment; Property; Design; Valuation; Real Estate Industry; Miami;

Citation:

Wu, Charles F., Aaron Stolear, Vitali Bourchtein, and Sayiddah Fatima McCree. "Miami Price: Bidding on an Iconic Transit-Oriented Development Site." Harvard Business School Case 218-034, September 2017. (Revised December 2019.) View Details

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In 2019, two Cuban entrepreneurs discussed their growth strategy, given the regulatory framework instability, for private companies, in Cuba. Experiencya Cuba offered car and apartment rentals, airport pick-up, and tours around the island, all conducted in perfectly restored American cars from the 1950s.

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SOHO China: Transformation in Progress

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