New World Development is developing a prime commercial site in Shanghai in the first major deal in mainland China by the heir to Hong Kong’s fourth-largest property group. The Hong Kong-listed developer won the bid for a 17,170 square metre (184,817 sq ft) land parcel located at Middle Huaihai Road for 4.11 billion yuan (US$592 million), according to a company announcement on late Tuesday. The site sits along the city’s most expensive shopping belt fashioned after Avenue des Champs-Elysées in Paris. The transaction is the biggest land deal in Shanghai for Adrian Cheng, the Harvard-trained scion of the HK$102 billion (US$13 billion) property empire, since he was put in charge of the mainland China market under the group internal reorganisation last February. The plan placed him as the next generation successor at the business group. The price tag translates to 31,946 yuan per sq m and the site is capable of yielding a total gross floor area of 128,683 sq m. New World Development plans to build its second commercial project in Shanghai under the brand of K11 on the new site, it said, without disclosing further details. “It is one of the major transactions for a commercial lot in Shanghai since the Covid-19 outbreak,” said Vincent Cheung, managing director of Vincorn Consulting and Appraisal. The investment cost could be as high as 6.9 billion yuan, including the land cost, he estimates. The bid underpins recent purchases of Hong Kong developers making further inroads into the mainland market as they seek new sources of growth. They included Hongkong Land’s record 3 1 billion yuan purchase of a parcel at the West Bund area in Shanghai in February. “Certain parts of the retail market are already recovering in terms of demand from certain sectors, retailers are taking on new space and footfall has rebounded,” said James Macdonald, head of Savills Research China. “Overall occupancy rates and rents will take longer to recover, and certain areas and projects will recover faster than others.” Hongkong Land pays a record 31 billion yuan for Shanghai land plot as it continues its search for growth in mainland China The New World Development group opened its first K11 mixed development project in Shanghai in 2013, comprising the 37,500 sq m K11 Art Mall and an 81,000 sq m office building. Mainland China contributed almost 74 per cent of the group’s gross profits from property development business, according to its interim report published in March, citing inroads into the Greater Bay Area cities. The group also derived 35 per cent of its profits from property investment. Cheng was appointed the executive chairman of New World China Land, the group’s flagship property arm in the world’s second-largest economy, according to the group announcement in February. He is the eldest of six children of current group chairman Henry Cheng Kar-shun, who took over the helm after the death of founder Cheng Yu-tung in September 2016. Cheng Yu-tung, Hong Kong tycoon who enjoyed helping friends, goldsmith apprentice who once upstaged Donald Trump “I will continue to lead the team to bring artistic and cultural elements to the city in an unconventional way, enrich people’s lives, and promote business development through disruptive innovations,” the younger Cheng said in the statement. “In addition, we will create an impetus for long-term social development while enhancing the life experience of the public.” Cheung of Vincorn expects New World Development to develop the site into retail, office and serviced apartment units, which are enjoying strong demand. A two-bedroom serviced apartment measuring 130-150 sq m currently fetches about 40,000 yuan a month in rental, he added. Eddie Ng, managing director of JLL East China, said business activity has gradually returned to normal and consumer confidence is improving because Shanghai has taken steps to ease measures aimed at controlling the Covid-19 outbreak. “Office leasing has resumed as the decentralised market saw more demand and firms pursued cost-saving strategies,” he said. “Residential sales have rebounded strongly” as pent-up demand was unleashed, he added. “Retail sales in Shanghai are recovering, though leasing demand remains somewhat sluggish.”