Greystar Announces Second China Project After Buying Jing’an Site

Greystar has acquired a site on Qiujiang Road in Shanghai’s Jing’an district for development under the American apartment builder and operator’s LIV’N rental brand, the company announced on 10 August.

The developer and fund manager purchased the roughly 8,000 square metre (86,000 square foot) plot of land this year for an undisclosed price and once completed the project is expected to yield more than 500 rental homes as part of a larger mixed-use community.

The deal, which is Greystar’s second project in China, comes as Chinese authorities continue to emphasise development of a rental housing sector to accommodate the country’s growing class of mobile young professionals for whom home ownership in the mainland’s major cities looks increasingly out of reach.

Office Site Repurposed for Rental Housing

“The investment of the second LIV’N project in Shanghai demonstrates Greystar’s commitment and ambition in continuing to design and develop purpose built rental communities,” said Greystar’s China managing director Charles Ma.

Greystar’s new project is located near the intersection of Xizang Road and the Zhongxing Road section of Shanghai’s inner ring road. The site is one block away from the Zhongxing Road metro station on line 8 and also has access to lines 3 and 4, in what had been the city’s Zhabei district until it was annexed into the more upscale Jing’an district in 2015.

The identity of the seller, which had purchased the site earlier with plans to develop an office property, according to Greystar, has not been disclosed due to a non-disclosure agreement between the parties.

Office vacancy in Shanghai reached an average of 20 percent this year with projects in the secondary area expected to rise well above that as a pipeline of new projects comes online in the next three to five years.

Greystar Expands Shanghai Footprint

Greystar’s latest Shanghai project is its first development in the city, coming on the heels of a refit project in Changning district which the company launched under the same LIV’N brand in May.

Showrooms for the 474 unit LIV’N 833 complex overlooking Zhongshan Park opened in July with a grand opening slated for the end of this year.

LIV’N targets upscale urbanites and the 833 project incorporates a pool, outdoor terrace and communal podium level with rooms available to be booked for events.

“Greystar sees China as a hugely important market with the LIV’N brand being our initial step in a market the company continues to have confidence to grow and invest in,” Charles Ma told Mingtiandi back in May 2020.

Last month’s LIV’N launch was several years in the making. In 2017, Greystar established an office in Shanghai, which was also its first office in Asia Pacific.

Greystar and Zhongjun Real Estate signed a cooperation agreement that same year, announcing plans at the time to launch 50,000 long-term rental apartments in China’s first- and second-tier cities by this year.

The company’s first China-oriented apartment fund launched in 2019 and scored around $500 million in commitments from investors including APG Asset Management NV and Bouwinvest Real Estate Investors.

Greystar is the largest rental apartment operator in the United States with more than $35 billion worth of assets under management globally.

While China apartment rental management platforms such as Ant Financial-backed Danke and its NASDAQ-listed rival Qingke have been accused of financial failures by both tenants and landlords, owner-operators such as Greystar own their properties and lease directly to tenants instead of acting as intermediaries.

Shanghai’s Resilient Rental Market

News of Greystar’s latest acquisition is a shot in the arm for the Chinese rental market, which is still in the throes of a post-pandemic downturn.

“The leasing market is still reeling from the ongoing impact of travel restrictions as international tenants are effectively barred from entering the country,” said Savills’ head of research James MacDonald in a recent report.

Shanghai luxury residential rents fell an average 3 percent year-on-year to hit RMB 200 per square metre per month in August, Savills found.

However, serviced apartment vacancy rates have stayed virtually unchanged at 18 percent – down slightly from the first quarter of 2020 but up 1.9 percent from the second quarter of 2019. In comparison, Shenzhen’s serviced apartment vacancy rates reached 31% in the second quarter of 2020.