After opening its HKRI Taikoo Hui mall at 90 percent occupancy in November, Swire Properties is set to develop its second retail project in Shanghai. The latest venture for the Hong Kong-based builder is in Pudong’s Qiantan Area, an international business centre under development by the city government.
Swire announced Monday it had agreed to acquire a 50 percent equity interest in Shanghai Qianxiu, a company that holds the land use rights to a retail site in Qiantan, from state-owned Shanghai Newbund Company for RMB 1.3 billion ($213 million). The deal follows through on a preliminary agreement signed more than two years ago between the blue-chip Hong Kong builder and the Pudong district government enterprise.
“This is an exciting opportunity to participate in an important retail project in Pudong, an area that we believe has significant long-term growth potential,” said Guy Bradley, Chief Executive of Swire Properties in the statement. “We will undoubtedly benefit from working with Shanghai Newbund Company, which has substantial local property development experience.”
Shanghai Newbund Company is a joint venture between Lujiazui Group — the developer behind the Lujiazui business zone in Pudong — and Shanghai Qiantan International Business District Investment, which commissioned UK architecture firm Benoy to masterplan the Qiantan commercial hub.
Patience Pays Off in Pudong
The equity transfer agreement followed 30 months of negotiations between the Hong Kong developer and Shanghai Newbund Company. Swire said in August 2015 that a framework agreement had been entered to develop a 124,000 square metre mall in the area south of Lujiazui in Pudong.
The updated plan for the retail project has a gross floor area of about 116,000 square metres (1.3 million square feet), a 8,000 square metre reduction from the plan three years ago. The plot will be connected to a metro station served by three of Shanghai’s ever-growing set of subway lines.
Swire Expands Mainland Portfolio
The project will become Swire’s second development in Shanghai, after HKRI Taikoo Hui in Puxi opened in November.
Positioned as a high-end lifestyle destination for Shanghai citizens, HKRI Taikoo Hui’s 100,000 square metre shopping mall, features over 250 brands including international names like Michael Kors, COS and Calvin Klein.
The Hong Kong developer has a portfolio of five large-scale mixed-use projects in top mainland cities, including Taikoo Li Sanlitun and INDIGO in Beijing; Taikoo Hui in Guangzhou; and Sino-Ocean Taikoo Li Chengdu in Chengdu.
Shanghai Aims To Build a New Lujiazui
As it builds this latest mainland project, Swire is likely to find some familiar faces in its new neighbourhood, as a number of international developers are working with the Pudong district government to construct a “second Lujiazui” in Qiantan, some 12 kilometres south of the city’s financial hub along the Huangpu waterfront.
In 2017, Central’s biggest landlord Hongkong Land finalised a similar agreement with Lujiazui Group to build a 230,000 square metre (2.3 million square foot) commercial project in Qiantan. Meanwhile, US builder Tishman Speyer is developing its Crystal Plaza mixed-use project, which adds a combined 305,000 square metres (3.3 million square feet) of office, retail and residential space to the future business hub. Parts of that project were still awaiting planning and regulatory approval as of March 2017.
Lujiazui Group, which is controlled by the Pudong government and served as the primary developer for the Lujiazui Finance and Trade Zone, kicked off the Qiantan project in 2012. Master-planned by international design firm Benoy, the new commercial district is envisioned to include four million square meters of new space, of which half would be allocated to offices and commercial buildings, 40 percent to high-end residential projects and the remainder to public facilities.