Hopefluent Group Holdings Ltd, a Guangzhou-based property agent, said it will open more branches to fuel its development in the secondary housing sector.

The moves comes despite the fact that the market has been hit following city government measures introduced to cool down the housing sector.

The company, which trades its shares in Hong Kong, said it plans to invest HK$150 million (US$19 million) in 30 branches in Guangzhou.

It is looking to increase business in the secondary housing market, which deals in homes that are not being bought directly from developers.

"We have done a rising number of these transactions and we will do more," said Fu Wai-chung, director and general manager of the company. The number of such deals stood at 12,000 in 2005, compared to the previous year's 5,000.

The Guangzhou municipal government recently decided to levy a 20-per-cent transaction tax on certain second-hand house deals, part of its efforts to curb speculation in the sector.

"To be frank, we don't think the new policy will bite," Fu said. He predicted a 5 to 10 per cent increase in property prices this year.

"It is simply because demand in the city is too large."

He added that the company will only focus on Guangzhou's secondary market because Hopefluent does not "want to take the risk of getting into unfamiliar markets."

The company is a veteran in Guangzhou's primary property market, dominating about 50 per cent of the trade.

But Hopefluent would not be confined to the Guangzhou market, Fu said.

It will open three to five offices in other cities this year, costing HK$2 million (US$26,000) each, to deal with the sale of brand new homes, Fu said.

Some remote markets will also move onto Hopefluent's development agenda.

"We will probably establish a branch in Hohhot, in North China's Inner Mongolia, where a developer wants us to be the adviser for a 5,000-acreage (333-hectare) project," he said, adding the deal has not been finalized yet.

This year's expansion pace, however, will be much slower compared to 2005, when Hopefluent set up offices in the country's 14 largest cities.

Fu said the slowdown is due to the company spending more energy consolidating the businesses in branches already opened.

The company now has 150 branches in 20 mainland cities.

Fu said the company currently has about HK$100 million (US$13 million) cash and does not need to raise funds for its expansion.

The company raised HK$18.5 million (US$2.4 million) this month by selling 14 million shares to its strategic investor Value Partners for HK$1.38 (18 US cents) each.

Source: China Daily