Shanghai Tomson in US$100m Pudong venture
TOMSON Pacific's subsidiary, Shanghai Tomson Real Estate Investment and Development Co, has signed an agreement to jointly develop a 420,000-sq metre site with Shanghai Xinli Development Co in Pudong's Huamu district.
The development project represents a total investment of US$100 million.
Both companies have 50 per cent stakes and a joint-venture company - Shanghai Tomson-Xinli Real Estate Development Co - will be formed to oversee the project.
Tomson's executive director Hsu Feng said the $100 million investment would only be for the demolition of existing buildings and relocation of the occupants.
'It does not cover the design and construction of the site which has a construction area of one million sq metres,' she said.
The demolition and relocation will be done in stages over the next two years.
Under the joint-venture agreement, the term of Shanghai Tomson-Xinli will be 73 years.
Ms Hsu said the site would house residential properties, offices and a hotel.
'It will be sold to domestic and foreign buyers,' she said.
Ms Hsu said Pudong was a feasible area for them to invest in because of the attractive 15 per cent tax rate given for property development projects.
The project is one of 21 property development projects that Tomson is developing in Shanghai.
Construction work is under way on 10 projects and Ms Hsu said they would be for sale while the rest would be for investment purposes.
One of the bigger projects is the development of a golf course and 960 villas surrounding the area, which represents an investment of $200 million.
Ms Hsu said Tomson's land bank had three million sq metres but only 2.5 million sq metres were suitable for construction.
She also expected the group's profits to increase in the next two years when their development projects were complete.
Ms Hsu said they were preparing to set up a finance company in Shanghai.
The group anticipated that it would be in place within a year or so.