Singapore’s CapitaLand is reportedly investing at least RMB 12.79 billion ($1.85 billion) to acquire its most expensive real estate project yet in mainland China, according to accounts in the mainland media.
Southeast Asia’s largest developer would be paying the record sum to acquire the 1.5 million square metre (16 million square foot) Star Harbour International Center project (上海星外滩) in Shanghai’s Hongkou district from Shanghai Port Group, after the state-run developer announced to an official government marketplace on Friday that it planned to sell the property north of the city’s historic Bund.
Should the reported transaction be realised, it could bring investments by CapitaLand and its REIT affiliates in mainland development projects and income generating real estate assets to nearly RMB 25 billion within the past year. Representatives of CapitaLand declined to respond to inquiries by Mingtiandi about the potential investment before the time of publication
Hongkou Project Listed for Sale
Shanghai Port Group notified the Shanghai United Assets and Equity Exchange on Friday that it is listing for sale 100 percent of its equity in Star Harbour’s project company on the government sponsored exchange at a reserve price of approximately 12.79 billion.
According to the rules of the exchange, the listing means that the developer intends to sell the asset within one year of the listing.
Although Shanghai Port Group stated in the announcement that it had not confirmed a buyer for the project, a report in mainland business news site Jiemian.com cited sources in the Shanghai market as indicating that Capitaland has agreed to buy the multi-phase project.
Buying a New Business Hub on the North Bund
The target of the transaction is a multi-building complex which in its first phase, includes a pair of 263-meter high skyscrapers which upon their expected completion at the end of March next year, would yield a gross floor area of 427,600 square meters.
According to the website of the project’s designers, US-based Pelli Clarke Pelli Architects, the master plan for the project along the city’s Dongchangzhi Road includes four contiguous buildings connected by a rooftop garden and sky bridge overlooking the Huangpu river that divides Puxi from Pudong.
The twin towers are included in the first phase of the project, with one tower devoted wholly to office space, and the other designed to include 21 floors of office and 24 floors of serviced apartments.
In the lower floors of the towers, the project incorporates a six-level retail podium including two below-ground levels. The entire complex occupies a 300,000 square metre site situated behind the Shanghai International Cruise Terminal and connects directly to the International Passenger Transport Center station on metro Line 12, which also incorporates a 4,000 square metre bus station.
Project Sold One Year After Jinmao Exit
Shanghai Port Group’s announcement of the planned sale of the Star Harbour International Center project comes less than one year after the state-run developer bought out its partner in what had originally been a 50:50 joint venture project.
Launched as a cooperative effort between Shanghai Port Group and the company then known as Franshion Properties in 2013, the port operator bought out its partner’s 50 percent interest in the project last December for just under RMB 6 billion after the company had changed its name to China Jinmao Group in 2015.
Hong Kong-listed China Jinmao had announced a plan to sell a 50 percent stake in the Star Harbour International Center project in October last year, before officially listing the equity on the asset exchange in November.
CapitaLand Focuses on China’s Major Urban Hubs
Lucas Jen Yuh Loh, CEO of CapitaLand China, said earlier this year that the developer will focus its mainland investments around the fast-growing economic centres of Beijing, Shanghai, Guangzhou, Chengdu, and Wuhan, and this latest deal appears to follow a series of acquisitions in the last year aligned with that strategy.
In December of last year CapitaLand teamed with its retail REIT affiliate, CapitaLand Retail China Trust (CRCT), to acquire the 83,591 square metre Rock Square shopping centre in Guangzhou from a PGIM fund for RMB 3.36 billion.
Later that same month, the developer picked up a commercial site in the Wujiaochang area of Shanghai’s Yangpu district for RMB 838 million.
In June of this year, the Singapore government-backed firm followed up on that pair of December purchases with its RMB 5.7 billion acquisition of a mixed-use site in the western China city of Chongqing which will be developed into a retail, office, and residential property yielding over 2,100 homes.
In August the developer turned backed Guangdong to buy a pair of adjoining residential sites in the mega-city’s Zengcheng district for RMB 2.05 billion. That suburban project will enable CapitaLand to build up to 1,300 homes in Guangdong’s largest city by 2021.