Selling face cream is not the usual path to owning large commercial buildings but, with some help from WeChat, a Chinese beauty products brand controlled a by a celebrity couple just purchased a Pudong office block for RMB 1.76 billion ($248 million).
TST, also known as Tin’s Secret, purchased Tower 2 in Tishman Speyer’s Crystal Plaza project in Pudong earlier this month, according to a statement by the New York-based developer, paying the equivalent of RMB 68,445 per square metre for the 26,305 square metre (283,145 square foot) property.
The acquisition by the brand founded by Taiwanese-born mainland actress Zhang Ting is seen as a vote of confidence in Qiantan, the up-and-coming Pudong neighbourhood which has been promoted as the new Lujiazui, and is Tishman Speyer’s second sale of an office asset in the 357,000 square metre mixed use project.
Qiantan Emerges as Low Cost Hub
“The Qiantan area has been quite hot in Shanghai,” Wilson Chen, senior managing director and chief investment officer for Tishman Speyer in China told Mingtiandi, adding that, “Many end users who are cash rich would like to buy office buildings in the city.”
The office portion of Crystal Plaza, which includes six buildings covering some 199,000 square metres of space, opened in 2018 as a joint venture between Tishman Speyer and the Shanghai government’s Lujiazui Group. That same year Tishman Speyer sold one of the half-dozen blocks in the complex to Shaanxi Energy Group for around RMB 1.52 billion, or around RMB 65,000 per square metre.
Danny Zheng, director of capital markets at brokerage Knight Frank in Shanghai indicated that asking rents in the Qiantan area average from six to eight renminbi per square metre per day and said that many multinationals are likely to relocate to the emerging commercial district.
The asset was sold unoccupied, however, among the tenants of Crystal Plaza’s four other towers are former Bayer unit Covestro AG and mainland classifieds provider 58.com with Tishman Speyer itself making its China headquarters in the complex. The office towers still held by Tishman Speyer are currently 44 percent tenanted, according to the developer.
Chen pointed to the project’s connectivity and green credentials as helping to make Crystal Plaza attractive to investors. “There are three subway lines, so transportation is great, and it’s very green,” he said, crediting Lujiazui Group for having developed a masterplan that combines a commercial district with an appealing residential community in the riverfront location.
Masterplanned by UK design firm Benoy, Qiantan, which is located just south of the former Expo site in Shanghai is served by lines 6, 8, and 11 of the city’s metro system through the Oriental Sports Center Station. Swire Properties’ Taikoo Li Qiantan shopping centre is set to open in the neighbourhood 30 minutes drive south of Lujiazui starting later this year.
James Macdonald, head of research for Savills in China noted that while the Shanghai market in general is struggling with a large pipeline of new office projects and depressed demand from occupiers, this section of Pudong has fared better than most of the other decentratlised locations.
“Qiantan is one of the better submarkets – strong connectivity via both metro lines and elevated highways, government support, master planning and mix of uses, as well as top tier developers,” Macdonald noted. “Owners seem to have been responsive to the changing situation and prioritized securing tenants and filling up buildings.”
Online Brand Buys Pudong Tower
For TST, which Zhang Ting co-founded seven years ago with her husband Lin Ruiyang, the acquisition was a sign of the power of combining celebrity with China’s social media platforms.
In 2018, TST’s parent company, Shanghai Daerwei Trading Co., was listed as the top corporate income tax payer in Shanghai’s Qingpu District, with an annual payment to the city of RMB 1.26 billion. In the first three quarters of 2017, Daerwei generated revenue of RMB 3.6 billion.
The firm which sells moisturisers, anti-aging treatments and cosmetic products primarily promotes its products to the public via Wechat, where Zhang’s fame as a star of The Switch, and of mainland TV series “The Empress of China,” helped to attract online consumers.
While it has helped Zhang and her family to become investors in institutional grade assets, the success of TST has not been without controversy, with one local media outlet having published an account of consumer complaints of adverse effects from using the company’s beauty products.
Tishman Speyer Still Sold on China
The asset sale by Tishman Speyer comes just over one year after the Manhattan-based firm sold a retail asset in Chengdu for RMB 5.6 billion.
While acknowledging the unique challenges that 2020 has presented, Ryan Botjer, senior managing director and head of Tishman Speyer’s business in China, noted that, “…we are still investing in China, still committed to its markets and still looking for new opportunities.” The 16-year company veteran indicated that the company, which has developed more than 1.44 million square metres of property in China is currently exploring new opportunities on the mainland.
In May of 2019 the US developer had sold the Atrium mall, a shopping centre which forms the lower floors of a commercial project developed by Tishman Speyer in Chengdu, to a joint venture between a fund manged by Singapore’s ARA Asset Management and another vehicle controlled by Beijing-based private equity firm CICC Capital.
Skye Li provided research for this story.