Singapore’s City Developments Ltd (CDL) has acquired a 32,000 square metre commercial project near Shanghai’s Hongqiao transportation hub in its second real estate investment in the mainland megacity in less than one month.
CDL’s wholly-owned subsidiary, CDL China Limited (CDL China), has entered into an equity transfer agreement to acquire a 100 percent equity stake in Shanghai Meidao Investment Co for RMB 900 million (approximately $131 million), according to a statement today by the Singapore-listed developer. Shanghai Meidao owns Meidao Business Plaza in Huacao, Minhang District.
CDL Continues to Build Mainland Portfolio
“As part of CDL’s strategic diversification strategy, China is one of our key overseas markets for growth,” said CDL China CEO Mark Yip in a statement. He added that, “Since CDL China was set up in 2010, we have established our foothold in the key upper tier cities of Chongqing, Shanghai and Suzhou, with four residential and mixed-use development sites totalling over 500,000 square metres of gross floor area.”
Meidao Business Plaza has a total gross floor area of over 32,000 square metres spread across five nine-storey towers and is expected to be completed by the second half of this year.
The company expressed enthusiasm over the prospects for the project’s location near tbe Hongqiao transportation hub, a priority infrastructure project by the Shanghai government. The hub at the city’s western edge connects a domestic airport with a high speed rail station and two subway lines. CDL said that it expects more than 650,000 employees will work in the area by the end of 2020.
Honqiao Leasing Has Been Slower Than Expected
The government’s investment in infrastructure at the Honqiao hub has lured a number of commercial and residential developers to the suburban area, however, some office projects have reported weak demand from tenants. According to leasing agents familiar with the market who spoke with Mingtiandi, despite rents near the Hongqiao hub being less than half of the rates charged in Huaihai Road, Nanjing Road or other prime Shanghai locations, vacancies in the area may continue to rise in 2017.
The acquisition by CDL comes only three weeks after the company entered China’s co-working race with a RMB 72 million investment ($10.5 million) in Shanghai-based Distrii. That deal provided the Singaporean company with a 24 percent stake a provider that operates nine co-working centres across Shanghai, totalling 2,200 desks.