Tishman Speyer snaps up Shanghai site

PUBLISHED : Thursday, 24 January, 2008, 12:00am
UPDATED : Thursday, 24 January, 2008, 12:00am

Winning bid 32pc below expectations as tough auction rules eliminate competition

A United States developer, co-owner of New York's Rockefeller Centre, is believed to have won a Shanghai mega-site on the opening bid as rivals were eliminated by the city's tough rules to limit bidding up land prices.

Tishman Speyer won Lot F in New Jiangwan City in the northern district of Yangpu for 6.8 billion yuan, sources said.

The price for the site was about 32 per cent lower than the market expectations of 10 billion yuan.

The US developer manages about 112 million square feet in total assets, and more than 91,000 residential units in metropolitan areas across Asia, Europe, Latin America and the United States.

The price for the site is equivalent to 7,555 yuan per square metre, assuming the residential-office-retail-entertainment site provides a gross floor area of 900,000 square metres.

The latest sale price was 65 per cent below a site in the area sold to Singapore-listed Yanlord Land Group for 1.3 billion yuan, or 20,000 yuan per square metre, a record for the area in November last year.

Sources said the auction came with a set of tough entry requirements. For example, overseas investors were barred from using foreign currency to pay the 700 million yuan initial deposit for the site, in contrast to previous auctions.

Sources said Tishman Speyer already had yuan on the mainland. It had bought a piece of land and an uncompleted residential project in Chengdu last year.

It also participated in bidding for a prime retail-office site at East Nanjing Road in Shanghai in August. The site was sold to Sunning for 4.4 billion yuan, or a record 66,927 yuan per square metre.

The district government hopes the expertise of the renowned international developer will raise the profile of the area, sources said. They added that the deal would attract other major multinational corporations to move in, helping to create new employment.

The site comprises 500,000 square metres of office space, 200,000 square metres of residential and 300,000 square metres of retail space.

Tishman Speyer was unavailable for comment yesterday.

The city government will announce the result of the sale after 10 days.

Fitch Ratings property analyst Michael Wu said the deal was in line with Beijing's determination to slow climbing land prices. At first glance, he said it looked like the winner had secured a 'sweet deal' in terms of the surprisingly low price.

'But we'll never know the agreed terms between the winner and the district government. The winner of the site may need to fulfil certain conditions to enhance the district's economic benefits, which would also be costly,' he said.

He said it was unlikely that future government land auctions would see record prices since the government's tightened credit policy had dried up liquidity.

A month ago, Sun Hung Kai Properties won a 12.1 million square foot commercial-residential site in Chengdu for an opening bid of 3.11 billion yuan with no competition.