Wheelock Properties

Auction deal scrapped after site delivery failure

PUBLISHED : Thursday, 14 August, 2008, 12:00am
UPDATED : Thursday, 14 August, 2008, 12:00am

Nanjing Suning Development said a prime commercial site in Shanghai it won at auction last year for a record 4.4 billion yuan (HK$5.01 billion) had been returned to the government.

The company said the transaction was scrapped because the government failed to hand over the site before the April 16 deadline as construction work on a subway line under the area was taking longer than expected.

The company, which had planned to build its headquarters on the site, has received a full refund from the Huangpu Government Real Estate and Land Bureau.

'The decision was arrived at after an arm's length negotiation with the government,' it said.

In August last year, the group surprised the market by outbidding some of Hong Kong's biggest developers for the 13,709 square metre office-retail site on East Nanjing Road, Shanghai's busiest shopping address.

Bidders included Sun Hung Kai Properties, Wheelock Properties, Tishman Speyer Properties and Hong Kong Construction.

Assuming a developed gross floor area of 65,743 square metres, Nanjing Suning would have had to offer any space at 100,000 yuan per square metre - double market prices - to make a reasonable profit.

Analysts said the cancelled deal should be positive for the firm as Shanghai's property market was undergoing a correction amid the government's cooling measures.