Treaty of Nanking

Henderson hopes to ride on Shanghai property wave

PUBLISHED : Friday, 07 April, 2006, 12:00am
UPDATED : Friday, 07 April, 2006, 12:00am

Henderson Land Development plans to speed up its commercial portfolio expansion in Shanghai over the next two years to take advantage of growing demand.

Its development pipeline includes a total gross floor area of about 200,000 square metres of commercial and office space in Puxi, with about a quarter set for completion next year.

'The scale and volume of the property market in China is huge,' said Cheung Fong-ming, executive director of Henderson (China), the privately-held mainland development arm of Henderson Land.

Henderson has already started work on its office development at 130-2 Heng Feng Road in Zhabei district, which will provide 47,380 square metres of space when completed next year.

It also plans two commercial complexes totalling 150,000 square metres on Nanjing Road West in Jing'an and Nanjing Road East in Huangpu. Mr Cheung said work would start soon but did not to elaborate on the projected investment or estimated returns.

The developer's 50-storey Grand Gateway II - a 64,000 square metre office development in Xujiahui, Puxi - received a warm market reception, thanks to growing demand for office space from multinationals.

Its average daily rental rates have soared to US$1.20 per square metre - up 50 per cent from when it was launched in October. Occupancy had already reached 60 per cent, with most space taken by multinationals, said the firm.

Henderson yesterday signed a leasing contract at Grand Gateway II with Microsoft Corp for three floors of more than 5,100 square metres. The building also serves as the China headquarters of United States restaurant giant Yum! - parent of KFC and Pizza Hut - which has six floors of more than 948 square metres.

Shanghai, whose gross domestic product has been growing by double-digits for the past 14 years, saw its Grade-A office rental rates climb 25 to 30 per cent last year, according to Jones Lang LaSalle national director Remy Chan.

He expects foreign financial institutions to drive the city's Grade-A office market as China further opens financial markets this year under its World Trade Organisation accession agreement.

Foreign banks will be allowed to extend their yuan businesses to more mainland cities by the end of this year, while geographical limits on sales of life insurance policies will be lifted.

Last year, 73 financial institutions moved into Shanghai, bringing the total number in the city to 527. They included 84 foreign banks with assets totalling US$48.43 billion. Contracted foreign direct investment rose 18.3 per cent to US$13.82 billion last year. But actual investment, a more accurate barometer, edged up only 4.3 per cent to US$6.85 billion.