Dalian construction freeze gives New World the edge
THE Dalian government's decision not to grant permission for new office developments is seen as a boon by New World Development, which is building a twin tower office-commercial development in the northeastern city.
Tom Dai Keyuan, vice-general manager of the Dalian New World Plaza International, said such a move would provide better control over new supplies of office space in the city.
He said he was confident that it would boost the popularity of New World's project.
Although there is not one existing proper office building in Dalian, local developers have estimated that at least 5.3 million square feet of new supply will come on stream in the prime Zhongshan district in the next two years. Local developers do not discount the possibility of an oversupply, but are quick to point out that because of substantial foreign investment in Dalian, there would be an equilibrium between supply and demand.
Dalian New World Plaza is expected to be completed by the end of 1997 and will provide a 1.7 million sq ft of commercial space.
The development, to be situated in busy Tianjin Street, includes a 40-storey office tower and a 34-storey service apartment block above a seven-floor retail podium.
Efrem To Fei-yeung, project manager of New World Development (China), said if all units in the development were rented, a full return on investment could be expected in four years.
The project, in which New World holds a 35 per cent stake, involves a total investment of 1.2 billion yuan (about HK$1.11 billion).
Mr To said they had not decided whether to sell or lease the completed units.
'It depends, if the market is good, we could sell the units,' he said.
He said foreign companies which cannot find office space resort to renting hotel rooms, which, in turn, pushes up the hotel rates.
Daily rents average around US$2 per square metre.
New World Development is also developing a four-star hotel in the city's Renmin Road.
The project, in which it has a 30 per cent stake, involves an investment of between 1.4 billion and 1.6 billion yuan.