Shui On Land expects bumper rental income from Corporate Avenue II
Office-retail complex Corporate Avenue II could be included in the spin-off of China Xintiandi
Mainland developer Shui On Land says its office-retail project, Corporate Avenue II, will generate annual rental incomes of up to 700 million yuan (HK$862.84 million) once all the space has been leased.
The project, which will offer 105,000 sqmetres of office space in two towers and 51,000 sqmetres of retail space, is now under construction and is due for completion next year.
It is among several assets that could be included in the proposed separate listing for China Xintiandi, which will focus on managing, designing, leasing, marketing, enhancing investment properties in urban areas on the mainland.
Another possible asset that could be included in the spin-off is the group's 8 billion yuan office-retail-exhibition project, The Hub, which is under construction in the transportation hub in the Hongqiao commercial zone.
"[Corporate Avenue II] will be the only new supply of mixed-use development in a prime location in Shanghai for the next three to five years," said Carrie Liu, general manager for commercial at Shui On Development, a unit of Shui On Land. Annual rental income from the project could reach up to 700 million yuan once it was fully leased, she said.
Total rental income for the year to December would be about 1.2 billion yuan, Shui On Land chief executive Freddy Lee said. The group's full-year results will be announced in March.
The completion of Corporate Avenue II, part of the 52-hectare Taipingqiao redevelopment next to the core business centre on Huaihai Road, would enhance the value of its investment portfolio and rental income, Lee said. Shui On Land forecast the project would be worth 14 billion yuan.
The group had so far completed about half of the Taipingqiao redevelopment, Lee said, with finished projects including its Shui On Plaza headquarters, Xintiandi and Corporate Avenue I.
In the past four years, Shui On Land has spent 13.5 billion yuan in resettlement costs for the 1.7 million sqmetre Rui Hung Xing Cheng and the Taipingqiao projects. Lee said it would pay a further 4 billion yuan in resettlement costs for five plots of land for the two redevelopments.
Shui On Land chairman Vincent Lo Hong-sui said he was confident about the property markets on the mainland and in Hong Kong. But Hong Kong needed to "speed up its planning process and the building of government-subsidised housing to meet demand", he said on the sidelines of the groundbreaking ceremony for Corporate Avenue II yesterday.
He added that the mainland's urbanisation programme would create strong housing demand. "Our projects will remain sought-after among end users … as they are in prime locations," he said.