Soho China’s recent 3.2 billion yuan sale of a prime office building in Shanghai delivered strong yield, and underlined why investors remain bullish on the city’s commercial property market. Soho Century Plaza, in the Lujiazui finance district, was sold to Guohua Life Insurance for 3.22 billion yuan, according to documents filed with Hong Kong stock exchange, a significant premium on the 1.89 billion yuan Soho spent on the then nearly completed project five years ago. Gross profit on the deal, according to the document, was 502 million yuan. James Macdonald, head of Savills China Research, said: “Many developers are looking at adopting an ‘asset-light’ business model, in which they are divesting their assets and re-investing in new opportunities. “Developers are good at developing and investors are good at investing and asset management. “There is more understanding that you don’t necessarily [have to] own the property you build.” Insurers remain a driving force behind Shanghai office values as they pursue safe and liquid assets, even if yields remain low, Macdonald said, while other types of investor appear to be chasing fringe or upcoming locations, seeking shorter-term gains. Developers are good at developing and investors are good at investing and asset management. There is more understanding that you don’t necessarily [have to] own the property you build James Macdonald, head of Savills China Research Pan Shiyi, the chairman of Soho China, first revealed his intention to sell the plaza in March, saying it was a good time to cash in. The business is expected to use the proceeds to improve liquidity and strengthen its cash position. Pan was able to drive a hard bargain as the building had claimed a zero-vacancy rate for three consecutive years. Guohua Life said it was attracted by the project’s prime location, efficient operations and high rental income, adding it has built a strategy for real estate investment focused on prime commercial properties in first-tier cities. The Lujiazui area boasts 97 to 98 per cent occupancy, according to recent JLL figures. CBRE is also reporting an uptick in activity by domestic investors, particularly real estate funds, thanks to the country’s supportive monetary policies such as lower lending costs and stronger liquidity. Its latest market research shows average monthly rents in the centre of Shanghai rose to 308.2 yuan per square metre up to June 30, up by 4 per cent on the first quarter. The real estate service firm said office properties remained the most favoured asset type accounting for 60 per cent of total transactions in the second quarter. A pipeline of approximately 825,000 square metres of new space is expected on the market during the second half of 2016. Most of the new developments are in core CBD areas and achieved more than a 35 per cent pre-lease rate, an unexpectedly high figure, CBRE said.