Morgan Stanley nears deal on luxury Shanghai housing block
Morgan Stanley Real Estate Fund is close to signing an agreement to buy a luxury residential block in Shanghai for more than 800 million yuan, according to sources.
They said if the deal pushed through, it could be the first major property acquisition by a foreign firm since the central government unveiled its latest effort to cool the market.
The US fund was poised to buy the 32-storey Chateau Pinnacle Tower A, a high-profile property near Huashan Road, the sources said. The block is in a popular residential area within easy reach of the consulate district and commercial and shopping hubs.
'The mainland government's austerity measures have not dampened foreign funds' appetite for top-end properties,' the sources said.
A spokeswoman for Morgan Stanley said the company had visited the property 'but no deal has been signed so far'. She said a final decision would be made in the next two days.
Asking prices at the 270,000 square metre Chateau Pinnacle were about 30,000 yuan per square metre, valuing the block at more than 800 million yuan, the sources said.
They said the block would be managed by the fund's majority-owned boutique service apartment operator, Hong Kong-based Shama. In April, the fund took control of Shama to serve as its base for building a regional service flat operation focused on key Asian cities, particularly in China.
The tower, part of a residential-hotel development, consists of 116 standard units and four penthouse flats.
Albert Lau, a managing director at Savills' Central Management, which manages Chateau Pinnacle, said talks were under way with a variety of investors interested in buying premium properties in prime locations.
Jenny Wu, a residential director at DTZ Debenham Tie Leung, said there was not enough supply of service flats, especially high-end units, to meet demand in Shanghai.
Rents for one-bedroom, top-end service flats range from US$2,800 to US$3,900 a month. Four-bedroom units can cost almost US$10,000 while penthouse rents can climb to US$25,000 a month, according to DTZ.
The demand has been fuelled by the growing number of expatriates, many of them well-heeled executives living in China's main business city.
According to the Shanghai Statistics Bureau, the number of expatriates increased 15 per cent to 103,970 last year from 90,409 in 2004. The number of expatriates living in service flats leapt to 58,001 last year from 43,857 in 2004.
Despite the flats shortage, some property consultants warned that the Morgan Stanley unit could face a tough sell as it did not have a well-known international service-flat operator to run the project.
The fund has confirmed it had bid for the Ai Meng Dun Holiday Plaza shopping centre in Pudong which media reports have said could be worth two billion yuan.
The firm was also in advanced talks about buying a distressed asset, Dong Hai Guang Chang on Nanjing West Road, for about two billion yuan, sources said.
HOME ON THE BUND
Shanghai's major high-end service flats
Rents (US$/per month)
Tomorrow Square
one-bedroom 3,100-4,000
two-bedroom 4,000-5,400
Shanghai Centre
one-bedroom 3,200-3,600
two-bedroom 4,700-6,800
three-bedroom 5,500-9,300
penthouse 11,000-13,000
Kerry Residence
one-bedroom 2,600
two-bedroom 4,000
penthouse 15,000
41 Heng Shan Lu
one-bedroom 3,000
two-bedroom 4,500-6,500
penthouse 25,000
The Ascott
one-bedroom 3,000
two-bedroom 4,500-6,500
penthouse 85,00-13,000
Lanson Place
two-bedroom 5,900-8,200
three-bedroom 6,400-9,500
Source: DTZ Debenham Tie Leung
