Lujiazui Group, the largest state-owned developer in Shanghai’s Pudong district has agreed to pay RMB 9.1 billion ($1.28 billion) to acquire a mixed-use site in the city’s Zhangjiang High Tech Park, according to an announcement last week by the Shanghai Land Exchange.
Shanghai Dongyi Real Estate, a unit of Lujiazui Group, was the sole bidder for the 89,900 square metre (967,675 square foot) site at a government land sale last week, agreeing to pay the equivalent of RMB 17,829 per square metre of gross floor area for its latest Pudong prize.
The land sale paves the way for Lujiazui Group, which has previously partnered with developers including Swire Properties and Tishman Speyer on Shanghai projects, to begin development of a set of seven high-rise buildings, including one of a pair of 320-metre supertall towers in the eastern Shanghai suburb.
Jumbo Site to Support Twin SuperTalls
The project, which occupies the largest mixed-use site ever developed in Zhangjiang High Tech Park, will eventually yield 510,897 above ground square metres of offices, rental housing and space for other businesses, according to the government land use approval. Including below ground space the project will total 830,000 square metres of gross floor area.
As sketched out in Zhangjiang’s masterplan, the centrepiece of the project near Xuelin station on Shanghai’s metro line 13 is a 320-metre tall supertall tower, which if completed today would rank as the city’s fifth-tallest building and would be the only supertall located outside of the metropolis’ core districts. The masterplan calls for second supertall twin on an adjacent site, which was not included in this latest land auction.
In its core area along metro line two, Zhangjiang High Tech Park is located six subway stops east of the city’s Lujiazui financial district, which was developed under the administration of Lujiazui Group and is home to Shanghai’s two tallest buildings, the 632-metre Shanghai Tower and the 492-metre Shanghai World Financial Centre.
In addition to the supertall tower, the new site is approved for six additional buildings ranging from 100 metres to 200 metres in height.
Tender Conditions Require Rapid Development
Lujiazui Group’s lack of competition for its eastern Shanghai trophy could be due in part to the conditions set in the land tender which require rapid development and the ability to attract top-flight tenants.
The state-run developer is required to begin construction on the project within 12 months after finalising its acquisition of the land, with the entire development mandated to be completed within 72 months.
In line with the central government’s emphasis on expanding the stock of rental housing in China’s largest cities, the tender conditions also require the developer to complete the project’s minimum allotment of 691 units of rental housing within 48 months of the land sale completion. The twin towers are required to begin construction by 31 December of this year.
Once underway, Lujiazui Group will also be required to attract the right occupiers to the office element of the project, with the government mandating that the developer persuade at least five finance or technology firms to establish corporate headquarters in the project, with those company bases to be certified by the city of Shanghai or the government of Pudong district.
Lujiazui Group Takes on Latest Mega-Project
Lujiazui Group, which was formed in 1992 to administer the development of the Lujiazui financial district when that urban hub was an early stage project, has since become one of Shanghai’s most powerful developers.
Before taking on the development of this latest set of projects in Zhangjiang, Lujiazui Group in 2013 paid RMB 4.52 billion to acquire a 105,900 square metre site which has since been developed as the Qiantan Central Business District.
In Qiantan, which is located south of the city’s former Expo site in Pudong, Lujiazui Group engaged UK design firm Benoy to map out a masterplan for the commercial area.
In 2015, Lujiazui Group signed a joint venture agreement with Hongkong Land to develop a 500,000 square metre commercial development in Qiantan that the two parties estimated at the time would cost RMB 20 billion to develop. However, that joint venture was terminated in December 2018, according to an announcement in February this year by Hongkong Land.
Also during 2015 the state-owned group signed a separate agreement with Swire Properties to develop a 124,000 squre metre mall that would later become known as Qiantan Taikoo Li.
US developer Tishman Speyer entered a separate partnership with Lujiazui Group in Qiantan in developing the 305,000 square metre Crystal Plaza project, which includes office, retail and residential space.
With Qiantan’s office towers said to be scheduled for completion by the end of this year, and Qiantian Taikoo Li slated for opening in 2020, Lujiazui Group now appears to be heading east for its next Pudong project.
As of the end of 2018, Shanghai-listed Lujiazui Group had a total of 2.59 million square metres under its management, with another 1.56 million square metres under construction, according to its financial report.