Shanghai to put prime waterfront commercial site up for auction

PUBLISHED : Tuesday, 28 October, 2008, 12:00am
UPDATED : Tuesday, 28 October, 2008, 12:00am

Bucking the trend towards holding back land auctions because of the financial turmoil, Shanghai would put a prime site up for sale in December and expects it to fetch the highest price in the city's history, a municipal official said.

Gao Yufeng, a director of the Shanghai Land Reserve Centre, said the crisis could cut land prices to a 'reasonable' level, but she was still confident about the land's quality.

'We hope to attract developers that can withstand the financial crisis and have adequate experience,' said Ms Gao, who was in Hong Kong to promote the auction.

More than 10 Hong Kong developers, including Cheung Kong (Holdings), Wharf (Holdings) and Henderson Land Development, had shown interest and would meet her delegation this week, she said.

The site, in Huangpu district, sits on the west bank of the Huangpu River as an extension of the famous Bund district.

Designed as a commercial property project, it is named International Financial Service Centre of the Bund and has a ground building area of 270,000 square metres.

Shen Xiaochu, a deputy magistrate of the Huangpu district government, said three more sites on the river's west bank would be put up for auction in the next six to 12 months.

Property experts said the auction of the long-awaited site would be an indicator of the market's strength but warned that prices would not match the peaks of last year.

'The project is a commercial development that needs a lot of capital, but developers are experiencing mounting financial pressure,' said Lina Wong, a managing director at Colliers International.

Ms Wong estimated the average selling price would be lower than 53,600 yuan (HK$60,622) per square metre, which would be 80 per cent of last year's highest price of 67,000 yuan.

Albert Lau, the managing director of property consultant Savills Shanghai, said the site was the best in Huangpu's reserve but developers would not use last year's prices as a benchmark because market conditions had changed.

The experts said the government's measures to support the property market had not yet been extended to cover commercial or high-end residential projects, which could also dampen the interest of potential buyers.

Earlier this month, land auctions organised by the Shanghai and Beijing municipal governments were either withdrawn or received a poor response as developers tightened their purses because of the financial crisis.

Shanghai withdrew three sites after they failed to attract any bids, while three out of 10 sites offered for sale by the Beijing government attracted only one bid each.