New World Development to pay US$592 million for Shanghai site in first major deal by scion of Hong Kong property empire

New World Development wins bid for prime commercial site near Shanghai’s Xintiandi shopping district for 4.11 billion yuan (US$592 million)

Transaction is probably the largest deal since Shanghai started easing measures to combat Covid-19 outbreak, Vincorn says

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A picture of the newly renovated Xintiandi Plaza in Shanghai. Photo: Handout

Published: 6:45pm, 12 Aug 2020Updated: 10:59pm, 12 Aug 2020

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.

A pedestrian walks along a near deserted street in the Xintiandi area of Shanghai in early February. Photo: Bloomberg

“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 31 billion yuan purchase of a parcel at the West Bund area in Shanghai in February.

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