CORRECTED: Shimao sees benefit in cooling

(Corrects details of deal in paragraph 13 to incorporate an overall amount of shares; corrects paragraph 16 to show that the assets referred to were in Hong Kong-listed Shimao Property, not the A-share-listed firm as stated)

By Joseph Chaney and Umesh Desai

HONG KONG (Reuters) - Shimao Property Holdings Ltd. (0813.HK: Quote, Profile, Research, Stock Buzz), an arm of Chinese billionaire Xu Rongmao's real estate empire, says China's measures to cool the country's booming construction industry will benefit larger property firms, but worries over a land appreciation tax loom.

To ward off a bubble, the government has initiated measures including interest rate rises, a land appreciation tax, a capital gains tax on apartments, and raised the level of equity a developer needs to commit.

"They will weed out the smaller companies and in the end there will be those 50 to 60 bigger companies operating around the country which will have a bigger slice of the pie," chief financial officer Lawrence Hui said in an interview in Hong Kong on Tuesday for the Reuters Real Estate Summit.

"We developers have the profit tax already, the (land appreciation tax) is a second tax which taxes you on the difference between the turnover and the costs of those properties -- so it's a double tax," Hui said.

"What developers are trying to do is to think out some logical and legal way to avoid such taxes, such as legally increasing the cost of the developments."

But development -- fuelled by fast rising middle class incomes and an estimated 8 million people flocking to cities each year -- shows few signs of abating.

China attracted $9 billion in cross-border real estate investment in 2006, up 69 percent from a year earlier, and the likes of Citigroup Property Investors (C.N: Quote, Profile, Research, Stock Buzz), ING Real Estate (ING.AS: Quote, Profile, Research, Stock Buzz) and Invesco IVZ.L are ramping up their investments this year.  Continued...