Shanghai Industrial weighs 20b yuan property project
Shanghai Industrial Holdings, a company with interests ranging from infrastructure to pharmaceuticals, is considering developing a 20 billion yuan commercial property project in Shanghai with its state-owned parent, according to sources.
The planned 10-year development on Hongqiao Road in Xujiahui, Shanghai, would have office towers, retail spaces and hotels, the sources said yesterday.
The parent, Shanghai Industrial Investment (Holdings), had been in talks with the Xuhui district government on buying the 160,000 square metre site, the only undeveloped lot available in the district, sources said. Xujiahui is a commercial area southwest of Shanghai city.
The deal, if finalised, would be the Hong Kong-listed group's first step into real estate as it moves to build up a property portfolio. The investment was one of several Shanghai Industrial Holdings was examining seriously, a source close to the group said.
'It is expected that at least one sizeable investment in each of the real estate and pharmaceutical sectors will be finalised in the next five months,' he said. 'The size of the investments will each involve billions of yuan.'
Chairman Cai Laixing in April indicated his intention to augment revenue streams by building up a property portfolio in Shanghai and the possibility of the group buying assets from the parent. Its spokesman declined to comment yesterday on the possible property investment.
Recent central government efforts to crack down on property speculation and curb rising prices raised doubts about the timing of moving into the Shanghai property market, an analyst with a European brokerage said.
'Investment risks are on an upward trend with anti-speculation measures recently imposed one after another,' she said.
A 20 per cent capital gains tax on property sales and limits on property investment by foreign nationals and overseas Chinese took effect yesterday, the most recent in a series of measures taken since 2004 to cool the market.
Shanghai Industrial Holdings favoured commercial and retail property investment projects that could make early contributions to profit, a source said.
Shanghai Industrial Investment, the biggest investment vehicle of the Shanghai municipal government, last year completed reorganising its property portfolio - a 13 million square metre land reserve worth 12.6 billion yuan - paving the way for possible asset sales to the listed company.
Shanghai Industrial Holdings shares fell 2.9 per cent yesterday to HK$14.70.
