Logan Group Buys Shanghai Residential Plot for RMB 2.4B

Shenzhen-based Logan Group won a residential plot in Shanghai’s Yangpu District at a recent government land auction with a bid of RMB 2.381 billion ($340.7 million), marking the developer’s first foothold in China’s commercial capital.

Known until recently as Logan Property Holdings, a subsidiary of the company secured Yangpu District Dinghai Community D5-1 Unit 202010501 on 9 July after besting five rival contestants in 77 rounds of bidding, according to an announcement by the Shanghai Land Exchange.

Logan, which is controlled by billionaire Ji Haipeng, had vowed in its annual report released in April to, “actively seize opportunities of land acquisitions in the future, seek more mergers and acquisitions targets, and increase the Group’s premium land bank through multiple channels.”

Local media reports citing public information indicated that the developer had spent RMB 32.23 billion acquiring 23 projects in the first half of 2020, after purchasing a total of just 31 sites last year.

Land Bids Heat Up

Logan, which had expanded its portfolio into Hong Kong and Singapore before winning its first Shanghai site, has now earned the right to develop 36,400 square metres (392,000 square feet) of housing on the 14,600 square metre site in the district just north of Shanghai’s urban core.

At the consideration paid, Logan is committing RMB 65,412 per square metre of gross floor area after paying a premium of 18.98 percent over the auction’s starting price.

Logan’s competitors in the bidding, according to local news reports, included China Merchants Property, Beijing Financial Street Holdings, Hong Kong’s Wharf Holdings, Hangzhou-based developer Cosmos and Xiamen C&D.

That investment allows the company, which had revenues of RMB 57.5 billion in 2019, to develop the site next to the Aiguolu Station on Shanghai’s metro line 12 entirely on a for sale basis, with no requirement for holding properties for lease — terms which have become rare in the urban core of China’s first tier cities as the government pushes to develop a supply of rental housing.

The terms of the tender did include restrictions on home size, with Logan required to build no less than 80 percent of the homes in the project on floor plans of 100 square metres or less to reduce the sticker price of housing in the complex.

The site 500 metres west of the middle ring road, near where it enters the Jungong Road tunnel under the Huangpu River, is bounded on its east side by the Baiyangdian community and by Aiguo Road to the west. Changyang Road forms its southern boundary with the plot stretching north to Shunping Road

Braving the Pandemic

Logan Group has swum upstream during the pandemic by spending RMB 32.23 billion to acquire 23 projects in the first six months of this year, according to Sina Finance, primarily in its home province of Guangdong, but also in the Sichuan’s capital of Chengdu and the Guangxi provincial hub of Nanning.

In May, Logan set a record for Shenzhen’s biggest residential land acquisition ever, spending RMB 11.6 billion to acquire a site in the city’s Qianhai district at a rate of RMB 63,400 per square metre of housing.

In the same month, the group paid just under RMB 3 billion to purchase a plot in Guangzhou’s Baiyun District in a deal which valued the project at RMB 43,144 per square meter of buildable gross floor area — the fourth highest rate ever in the capital of Guangdong province.

Prior to winning the Yangpu district tender, Logan earlier this month lost out to cross-town rival China Merchants Property in the bidding for a plot on Jiaxing Road in Shanghai’s Hongkou district.

The company has been pursuing deals in the Yangtze River Delta since 2018 and currently owns 10 projects in the region including developments in Suzhou and the Shanghai ex-urb of Jiaxing in northern Zhejiang province.