Real estate developer Tishman Speyer continues to bet on the China dream with the US company announcing last week that it has secured its first project in Shenzhen, through a RMB 9 billion ($1.35 billion) joint venture with mainland high tech giant Lenovo.
The New York developer, whose CEO praised China’s urban infrastructure during a visit to Shanghai in June, said in a statement last week that it will build a 204,400 square metre office and retail development in Shenzhen’s central business district. The new complex will be occupied by Lenovo, which reigns as the world’s biggest PC maker and has also been stepping up its mobile phone business.
Tishman Speyer, which already has projects in the Chinese cities of Shanghai, Chengdu and Suzhou, had stated its interest in Shenzhen over a year ago, with the city’s high tech economy driving some of the fastest growth in property values on the mainland.
Tishman Speyer No Stranger to Joint Ventures
The deal with Lenovo is Tishman Speyer’s latest joint venture with a Chinese corporate giant. The American developer joined with China’s biggest homebuilder, Vanke, for a residential project in San Francisco in 2013, and last year received backing from China Life and Ping An Insurance to undertake a $500 million project in Boston.
The Shenzhen project will serve as headquarters for Lenovo’s international business, with the tech equipment maker occupying 40 percent of the complex’s 130,000 square metres of office space when it comes online in 2020. The mixed-use development will also include 72,000 square metres of retail space in Nanshan district’s Houhai area, near the rapidly developing Qianhai special economic zone.
The Shenzhen project will add to Tishman Speyer’s five existing mainland China projects, which already cover more than 1.7 million square metres (18 million square feet) of commercial, residential, retail and mixed-use projects.
Gaining a Foothold in China’s Hottest Major City
With Shenzhen having some of China’s fastest growing office rental rates, the joint venture with Lenovo allows Tishman Speyer to establish its first project in the city of 12 million people’s increasingly lucrative real estate market. Prime office rental rates in Shenzhen rose by 7.9 percent last year according to agency data, and home prices climbed 46.7 percent in the 12 months ending June 30th.
The developer’s China portfolio previously was confined to projects in the Yangtze River delta, where it has two projects in Shanghai and one in Suzhou, and western China, where it has two projects in Chengdu.