LaSalle IM’s COZI Hongqiao, which launched in June 2023 (Image: LaSalle Investment Management)
LaSalle Investment Management is set to launch a pair of long-term rental apartment projects in Shanghai under its newly established COZI brand, as the fund manager ramps up its rental housing portfolio in mainland China.
The property investment subsidiary of JLL has set first quarter launch dates for COZI East Bund and COZI Xinjiangwan, both located in northeastern Shanghai’s Yangpu district, according to an announcement on LaSalle IM’s WeChat account on Friday.
The upcoming launches, which follow the company’s mid-2023 launch of its inaugural COZI apartment in Shanghai’s Hongqiao area, are part of LaSalle IM’s mainland rental housing initiative, with the properties having been converted from commercial buildings acquired by the Chicago-based fund manager.
“LaSalle IM will continue to track and seek out high-quality assets in the market to carry out more long-term rental apartment projects, contributing to urban citizens’ dreams of a better life,” said Selena Shi, managing director of acquisitions and RMB fund for LaSalle IM China, said in the WeChat post.
The apartments are part of LaSalle IM’s strategy to invest RMB 10 billion ($1.4 billion) in China’s rental housing sector within the next three years, with a focus on the first-tier cities of Shanghai, Beijing, Guangzhou and Shenzhen, according to the announcement.
White-Collar Tenants
Located at 18 Huangxing Road, COZI East Bund is situated just outside Shanghai’s inner ring road – which delineates the city’s central core – and is a three-minute walk from Ningguo Road station on the city’s metro Line 12.
The property, which will have 368 rooms and is set to open in March, was converted from the 22-storey Huangxing Building which LaSalle IM acquired from mainland developer Landsea Green Management in 2022 for RMB 253 million (then $35 million).
Selena Shi, managing director of acquisitions and RMB Fund at LaSalle Investment Management
Through its LaSalle Asia Opportunity VI LP vehicle the fund manager paid RMB 22,140 per square metre for the 11,427 square-metre (123,000 square-foot) former office building.
LaSalle IM noted that the occupancy of branded apartments in the surrounding areas currently stands at over 90 percent.
Located seven kilometres north of COZI East Bund in Yangpu district’s Wujiaochang area, COZI Xinjiangwan is a set of three adjacent buildings situated at the intersection of East Yingao Road and Songhu Road. The 627-room project, which is expected to launch in February, is a five-minute walk from East Yingao station, which is served by metro Line 10.
LaSalle created the apartments by converting blocks 8, 9 and 10 of the Shanghai Jianfa Longting Phase One development for residential use, after the company had acquired the buildings from mainland developer C&D Real Estate in February 2023 for an undisclosed amount. Combined, the former office buildings span 26,299 square metres of space.
Both COZI East Bund and COZI Xinjiangwan aim to attract white-collar professionals working in the finance and technology industries, with Yangpu district being home to major Chinese tech companies including ByteDance, Meituan and Bilibili.
The latest projects build on the June 2023 debut of the 590-unit COZI Hongqiao, which offers apartments sized at 42 to 98 square metres and features 13,000 square metres of retail space on the lower levels.
That project was converted from a distressed retail and hotel property that LaSalle IM had acquired in 2021 alongside a unit of mainland developer Jingrui Holdings for RMB 438 million (then $68 million), with Jingrui holding a 25 percent stake in the asset.
“As LaSalle IM’s first long-term rental apartment project, COZI Hongqiao’s stable operating performance fully reflects LaSalle IM’s outstanding and mature operating capabilities in the long-term rental residential sector,” said Claire Tang, head of Greater China for LaSalle IM. “Going forward, LaSalle IM will rely on its industry-leading and market-oriented capabilities to advance high-quality construction and operation of rental residential projects in China.”
Ahead of COZI Hongqiao’s launch, Shi told Mingtiandi TV in March 2023 that branding multifamily projects is key to conveying standards of service and quality, adding that the disruption of access to goods and services during the pandemic highlighted the advantages of living in a professionally managed community.
Rentals on the Rise
LaSalle IM, which has been investing in Asia Pacific’s residential sector since 2006, managed $89 billion in global assets across private equity, debt, and public investments as of the fourth quarter 2023, of which $900 million were Asia Pacific residential investments.
The fund manager joins a growing club of global investors taking on exposure to Shanghai’s rental housing sector on the back of strong demand by young professionals, favourable demographics, high barriers to home ownership and policy support, according to consultancy JLL’s China Rental Housing Investment Sentiments Survey 2023. That poll of 50 investors based in Greater China, as well as respondents from elsewhere in Asia Pacific, the Americas and Europe, shows 93 percent of respondents planning to invest in China’s rental housing market within the next three years.
“We previously described the four phases of the rental housing market in China, which are the introductory phase, growth phase, lift-off phase, and mature phase. Considering the progress witnessed in the market, we believe that China’s rental housing market has entered the new stage of lift-off phase,” Daniel Yao, head of research at JLL China said in a report from September of last year.
Earlier this month, Manhattan-based developer and investor Tishman Speyer agreed to acquire a majority stake in the Holiday Inn Express Shanghai Wujiaochang for RMB 360 million ($50.4 million), with the property set to be renovated into a 305-unit serviced apartment project operated by Singapore’s Frasers Hospitality.
In September 2023, US fund manager PGIM Real Estate led a joint venture with the apartment management unit of mainland hospitality giant H World Group to acquire an apartment building in Shanghai’s Baoshan district from its developer, Hong Kong-listed Powerlong, with plans to develop a 500-unit residential project.
In September 2022, Canadian investment giant Brookfield bought a 42,000 square metre serviced apartment project in Yangpu district from mainland developers Guangzhou R&F Group and KWG Group for RMB 1.26 billion (then $180 million), to be launched as the first property under its Blinq brand of multifamily projects.
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