Standard Chartered Selling Former BlackRock Shanghai Complex at 42% Off

Standard Chartered has sold a pair of office blocks in Shanghai’s Putuo district at a steep discount after repossessing the properties from US asset management giant BlackRock late last year, according to people familiar with the transaction who spoke to Mingtiandi.

The UK bank agreed on 26 March to sell blocks E and G in Waterfront Place to Beijing-based DCL Investment for approximately RMB 695 million ($95.8 million), the people said, with that price representing a more than 42 percent discount from what BlackRock had paid to acquire the grade A office complex from PGIM Real Estate in 2018.

The purchase by DCL, which specialises in distressed assets under the leadership of former CDH Investment executive Selina Zheng, comes as average office rents in Shanghai’s core office locations have now fallen more than 34 percent since their 2018 peak. Office vacancy in peripheral districts, such as Waterfront Place’s location along Suzhou Creek, now averages close to 30 percent, according to agency data.

With China’s economy still not recovered post-pandemic, office landlords have struggled to fill their buildings and service their loans, with BlackRock having put its Waterfront Place on the market at an asking price of RMB 817 million in early 2024 before surrendering the buildings to Standard Chartered later in the year.

Rent Slide Continues

Standard Chartered sold the Waterfront Place buildings for the equivalent of RMB 25,000 per square metre, after BlackRock had paid around RMB 42,000 per square metre to acquire the 27,805 square metre (299,291 square foot) of complex seven years ago.

Bloomberg had reported earlier this month that DCL was in advanced talks to acquire the properties, after Standard Chartered’s repossession of the complex along Daduhe Road and West Guangfu Road near the Changfeng Park station on Shanghai’s metro Line 15.

At the time that BlackRock was marketing the properties early last year the Waterfront Place offices were said to be 70 to 80 percent occupied. Grade A office rents in the Changfeng area averaged RMB 5.03 per square metre per day in the fourth quarter of 2024, according to Colliers, down more than 11 percent from the same period a year earlier.

With Shanghai serving as China’s primary commercial hub, the city’s stock market hosted 101 initial public offerings in 2024 which raised RMB 68.0 billion, according to Deloitte. That IPO total was down from 313 new listings in 2023 with the capital haul having slid 81 percent from RMB 356.3 billion the previous year.

Buyers Grow Scarce

Before investing in Waterfront Place in 2018, BlackRock had acquired a 27-storey office tower on Shanghai’s Changshou Road in April 2017, with the world’s largest asset manager reported to have been marketing that 31,697 square metre for several months.

A report in the South China Morning Post last week said that BlackRock is asking RMB 900 million for Trinity Place, as the Putuo district complex is now known, with the price representing a 34 percent discount from the RMB 1.37 billion the company paid to acquire the property eight years ago.

With one-third discounts now common in Shanghai’s office market, multiple industry sources told Mingtiandi that they were unaware of any substantive investor pursuit of Trinity Place.

In December, Singapore-listed OUE REIT sold Lippo Plaza on Shanghai’s Huaihai Road for RMB 1.92 billion, which marked a 35 percent discount from a 2018 valuation of the 30-storey office tower.

In October, Carlyle Group agreed to sell The Crest in Shanghai’s Changning district for RMB 826 million, with that deal representing a 49 percent discount in US dollar terms to what the private equity firm paid to acquire the 31-storey an office tower nearly a decade earlier.