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Sandy Li

After seven years of investment, Hang Lung Group's joint-venture shopping mall in Shanghai is starting to produce returns and is expected to contribute an annual rental income of about US$24 million.

 Hang Lung (China) director Charlie Lin said that of the 209 shops leased in the 130,000 square metre Grand Gateway shopping mall, 151 were ready for the soft opening on December 28.

 Hang Lung Group and its joint-venture partner had invested $400 million in the initial phase of the 309,800 sq metre development since the site was granted by the mainland government in December 1992.

 The first phase comprises a shopping mall and a 268-unit serviced apartment project.

 Mr Lin expected the monthly rental generated from the shopping mall to be about $2 million.

 But the rent-free period of between 30 and 60 days to different tenants might affect the first two months' revenue, he said.

 The group's property investment arm Amoy Properties owns a 47.25 per cent interest in Grand Gateway.

 More than 200 retailers would be operational by next month, Mr Lin said, adding most tenants were racing against time to finish fitting out their shops by the Lunar New Year.

 In order to increase rental income, he said the group decided to divide some large-sized shops of 300-400 sq metres into five or six smaller units.

 This would raise the total number of shops to 270 from the original design of 245 after the restructuring of the remaining spaces, he said.

 Daily rental for small shops ranged from $2 per sq metre to $3.5 per sq metre, about double that for large-sized shops, he said.

 The soft opening had attracted about 120,000 visitors after the company spent about one million yuan (about HK$933,000) in a five-day promotion in the run-up to the new millennium.

 The group had confidence that the remaining retail spaces would be leased soon because of the successful soft opening, he said, adding the mall was expected to become one of Shanghai's most popular shopping centres.

 Leasing of the serviced apartments would also benefit from the popularity of the shopping mall.

 At present, 140 serviced apartments were leased at a daily rental of between 60 US cents and 65 US cents per sq metre, which was in line with the market level, he said.

 Amoy Properties would start to pre-lease another shopping mall at the Plaza 66 development in Shanghai in March or April, he said. The project's 60-storey office tower was scheduled for pre-lease by the middle of the year.



Hang Lung Shanghai venture nears return