Soho China buys another slice of Shanghai
Soho China, one of the largest commercial developers on the mainland, has acquired a retail and office building in Shanghai for 3.2 billion yuan from New World China.
The latest acquisition brings the developer's total investments in acquiring three projects this year to more than 7.3 billion yuan. All the projects are located in Shanghai and it is now halfway to reaching its targeted investment in new acquisitions for the year of 15 billion yuan.
The firm previously focused on Beijing's commercial market. But it began to diversify in Shanghai in 2009 and has since acquired seven projects in the city for 14.7 billion yuan. Chairman Pan Shiyi yesterday said the company was optimistic about the outlook for the Shanghai commercial market.
'We have seen office rents rise substantially in recent years, while occupancy rates have also stayed at a high level,' Pan said, adding that the firm would continue to acquire projects in prime locations of Beijing and Shanghai.
The developer yesterday announced it had signed a deal with New World China to buy Shanghai New World Changning Commercial Centre on Zhongshan West Road in the city's Changning district. It comprises two office buildings and retail space with an office floor area of 100,199 square feet and retail space of 12,664 sq ft. The project will be renamed 'Soho Zhongshan Plaza' after the acquisition is completed.
Soho President Yan Yan said the company planned to sell the project to individual investors by strata title in July or August at an average price of 50,000 yuan per square metre. The price of retail space would be higher than that for office space, and the developer should generate an attractive profit from the resale, based on an acquisition cost of about 28,353 yuan per square metre. The project is newly completed and has not yet been released for leasing. Soho China will help buyers seek tenants.
Despite the fact that Soho has 20 billion yuan cash in hand, Yan said it would raise syndicated loans outside the mainland in the next few months. This would give it more flexibility when acquiring new development projects, she said.
Pan said the company planned to launch Wangjing Soho in Beijing next month. The project provides a total gross floor area of about 500,000 square metres and will be the developer's major source of income this year. It is scheduled for completion by 2014.
'We are also selling the remaining units at Galaxy Soho in Beijing. Our projects ready for sale in 2011 and 2012 will also come from Beijing,' he said. The company was also trying to secure pre-sale consent to launch Hongqiao Soho in Shanghai as soon as the end of next year. The commercial project has a total gross floor area of 300,000 square metres, which will be completed in 2013.
Shares in Soho China rose 2.01 per cent yesterday to close at HK$6.59.
Soho China is optimistic about commercial property in Shanghai
The amount it has spent on projects in the city this year exceeds, in billions of yuan: 7.3