China Enterprise Wins Shanghai Residential Site for RMB 3.8B

State-backed China Enterprise has shouldered aside a pair of competing bids from China Vanke and China Resources Land to win a residential site in Shanghai’s Yangpu district for just over RMB 3.81 billion ($540 million), according to an announcement by the Shanghai Land Exchange this week.

The Shanghai-based developer, which counts China Resources Land as its second largest shareholder, picked up the 45,400 square metre (488,681 square foot) site in Jiangwan New Town in northern Shanghai at a rate equivalent to RMB 52,500 per square metre.

The RMB 3.813 billion winning bid, the developer’s first acquisition since China Enterprise completed a restructuring in early 2018, edged out a competing offer from China Vanke by RMB 1 million, and came at a premium of 0.02 percent over the auction reserve price.

Ready to Build 6oo New Homes

The 45,400 square metre site has a plot ratio of 1.6 and can yield up to 72,600 square metres of gross floor area, with the builder required to construct at least 600 new housing units.

As a condition of the government land tender, at least 15 percent of the finished space must be retained by the developer for rental housing purposes, and five percent of the built area, or at least 3,335 square metres, must be allocated for affordable housing.

Apart from the affordable housing component, all of the units in the project, covering at least 68,980 square metres must be fully finished with at least 70 percent of the total residential building area designated for small or medium sized units to ensure affordability. The project height is capped at 40 metres.

Yangpu Promotes Jiangwan as Emerging Residential Community

Located withing the outer ring road about one kilometre southeast of the Jiangwan New Town station on Shanghai’s metro line 10, the site was the first residential parcel put up for sale in the area since Shanghai’s Ronshine Group paid the equivalent of RMB 52,840 per square metre for a nearby site in 2016.

At RMB 52,500 per square metre China Enterprise is acquiring its Jiangwan plot for RMB 300 per square metre less than Ronshine’s 2016 purchase as a financing clampdown dampens developer demand for new projects.

Jiangwan New Town, a 9.45 square kilometre development zone occupying a former airfield, has since 2010 been earmarked by the Shanghai government as “a 21^st century eco-friendly knowledge-oriented garden district,” with the local authorities seeking to establish the area as a high-end suburban district on a par with the established international communities of Gubei and Lianyang.

In November 2015, Beijing-based Cinda Real Estate bought a 131,998 square metre site about 500 metres south of China Enterprise’s new acquisition for nearly RMB 7.3 billion, paying the equivalent of RMB 49,152 per square metre for that property.

China Enterprise Sees Sales Rise

China Enterprise, as one of Shanghai’s first local-grown real estate companies, has in recent years been focusing on commercial and residential development in the Yangtze River Delta including undertaking projects in Shanghai, Wuxi, Suzhou and Hangzhou.

Early last year, China Enterprise announced that it had completed an internal restructuring including the RMB 17.47 billion acquisition of Shanghai Star Real Estate Market Consulting Company from its parent company Shanghai Land (Group).

At the same time, China Enterprise conducted a share sale which brought in China Resources Land and Ping An Real Estate as new shareholders with China Resources Land becoming the second-largest shareholder in the company after Shanghai Land, which holds a controlling stake.

According to China Enterprise’s interim report, the company recorded an operating revenue of RMB 9.14 billion in the first half of 2019, up 19.22 percent from the same period last year. Net profit attributable to shareholders more than doubled to RMB 1.672 billion, with the company’s gearing ration standing at 67.06 percent as of the end of June.

In the first half of 2019, China Enterprise achieved contracted sales of RMB 6.634 billion, representing a 155.22 percent year-on-year increase, with an accumulated sales area of 135,570 square metres, up 10.86 percent over the first half of 2018.