Plot next to stadium may attract high bids

PUBLISHED : Wednesday, 29 August, 2007, 12:00am
UPDATED : Wednesday, 29 August, 2007, 12:00am

A mixed-use site adjacent to Shanghai's Hongkou Soccer Stadium is expected to attract keen bidding interest at auction next month and fetch a top price of about 1.5 billion yuan, according to property consultants.

That would make the site the most valuable of the 39 the municipal government announced it would put up for sale next month. Consultants estimated the accommodation value would range from 7,400 yuan to 10,000 yuan per square metre for the site which has a gross floor area of more than 152,000 square metres.

Aside from its location near the multi-function stadium and the Hongkou Stadium station on the Shanghai Metro Line 3, the zoning of the site will be attractive to bidders, say consultants.

There is only one 1,026 square metre residential site in the surrounding suburban Nanhui district and eight commercial sites, with the balance all zoned industrial.

Land-hungry local and foreign property developers are expected to make bids during land auctions next month to beef up their land reserves amid the government's tight residential and commercial land supply.

Andrew Ness, executive director of CB Richard Ellis' research department, said domestic developers were traditionally regarded as likely winners for the development of such sites in non-prime locations over their overseas counterparts. However, he did not rule out the possibility of tie-ups between foreign money and local know-how to structure joint bids.

'The sites are located either in the emerging suburban satellite areas or in fringe urban areas, rather than in established commercial hubs,' Mr Ness said. 'The development of those sites will not be subject to major financial pressure, but does require deeper local know-how and is subject to higher commercial risk.'

The Hongkou site, planned for commercial space and a hotel, is near Luxun Park and close to the major transport hub in Shanghai's northeastern part with a bus terminal, light rail station and another two future metro lines nearby.

Jim Yip, investment director of DTZ Shanghai, said: 'Prices of office buildings are already high. The bid price for this site will set a record as well as a benchmark for mixed-use plots.'

However, Mr Yip pointed out that Hongkou district was not a traditional central business district and there were no big-scale or well-developed office buildings around the site which could reduce its appeal.

Joe Zhou, a research manager at Jones Lang LaSalle Shanghai, agreed with the view. 'Developers, especially big developers, will definitely cast bids. But the site can never be compared to those in the CBD, like Huaihai Road,' he said.

Summit Property Development, a Shanghai developer, has already posted a design plan for the site on its website, calling it Summit Mall Hongkou.

A senior manager of Summit was reported by local media admitting that the design was intended for the site but the company declined to comment when approached by South China Morning Post.

As for the industrial land sites for sale, Jacky Zhu, associate director of DTZ industrial department, said the parcel of 30 plots now being brought to the market could ease supply pressures.