Staff reporter

Private developers rather than state-owned enterprises should be allowed to lead the real estate sector, Hang Lung Group (0010) honorary chair Ronnie Chan Chi-chung has said at a mainland forum.

Sharing his view at a real estate forum in Bo'ao, Chan said China should direct state-owned resources mainly to technology research and development, advanced manufacturing and other long-term businesses in which the private sector is unable to dominate.

As property development requires no cutting-edge technology, private developers should be permitted to play a dominant role in the sector, said the property tycoon who shifted the focus of Hang Lung from Hong Kong to the high-end market in mainland China in the 1990s.

However, he agreed that regulation has to be improved in respect of private players.

He disagreed with criticisms that Chinese private developers are greedy, saying greed is also a market driver.

The key to avoiding problems is to place private companies under the right regulations, he said.

"I don't believe developers in Hong Kong are less greedy than those in mainland China," Chan said, pointing out that it is similar in the United States.

Chan told the audience that a mature regulatory regime as those in the offshore markets as mentioned can regulate law-violating practices.

He believed that the Chinese property sector would learn from past mistakes and develop in a relatively rational and healthy manner.

The tycoon did not think the property sector would amass huge wealth again despite opportunities to make profits.

In another development yesterday, Moody's downgraded the credit rating of China Vanke (2202) to the junk territory from Ba3 to B1, expecting Vanke's home sales to fall 30 percent this year and 20 percent next year.

This came as the whole sector faces downward pressure in spite of supportive measures rolled out by Beijing.

Ronnie Chan agrees that regulation has to be improved for private players. BLOOMBERG

Let private developers lead, says Ronnie Chan