A joint venture led by Shui On Land has won the land-use rights to develop a residential project on a plot in Shanghai’s Yangpu district with a bid of RMB 2.38 billion ($340 million).
A wholly owned subsidiary of Shui On holds 60 percent of the JV, with the remaining 40 percent held by state-owned developer Shanghai Yangshupu, according to a Thursday filing with the Hong Kong stock exchange.
The parties plan to develop the 16,993.8 square metre (182,920 square foot) parcel on Pingliang Street into a heritage preservation project incorporating a high-end, low-density residential community, Shanghai-based Shui On said.
“The group is optimistic about the long-term prospects of the project, and considers it to be a strategic addition that will enhance the group’s market share and influence in Shanghai’s luxury residential market,” said chairman Vincent Lo. “The group anticipates the land will contribute good property sales income and strengthen the group’s financial position.”
Upmarket Riverside Zone
Situated in the Yangpu Riverside Zone about 2 kilometres (1.2 miles) from the Huangpu River, land parcel 03B3-01 at Block 6 of Pingliang Street is bounded by Xuchang Road to the east, Yangzhou Road to the south, Fenzhou Road to the west and Pingliang Road to the north.
The site sits near the Inner Ring Road elevated expressway in an area home to the headquarters of several internet firms. The plot is permitted for residential use for a term of 70 years with a gross floor area of 23,791.3 square metres, meaning the JV is paying roughly RMB 100,037 ($14,180) per square metre of potential GFA at the project.
“Given its location and development potential, the land is appealing to high-net-worth individuals, and the demand for high-end residential development is expected to be on the rise,” Shui On said.
The maximum capital commitment of the JV will be RMB 3.69 billion ($520 million), to be contributed by the partners on a pro rata basis.
Riding Out Xintiandi Stumble
Despite the cancelled Hong Kong IPO of its Xintiandi unit earlier this year, Shui On has remained upbeat as it continues to churn out sales and profit figures that most mainland developers would envy.
The group’s contracted property sales for the first half of 2022 rose by 55 percent year-on-year to RMB 18.7 billion (now $2.7 billion), Shui On said in its interim report released in September.
First-half profit attributable to shareholders eased to RMB 779 million from RMB 1.29 billion in the year-earlier period as the Chinese currency’s depreciation against the US dollar amplified foreign exchange losses.
The application for the listing of stand-alone entity Shui On Xintiandi — the holder of Shui On’s portfolio of 13 completed commercial assets, including Shanghai Xintiandi, the landmark shopping and entertainment complex in China’s commercial capital — lapsed into inactive status in March.
In August of last year, sources told Bloomberg that Shui On aimed to raise at least $500 million from the spin-off of the Xintiandi unit.
“We will proceed with this transformation of our group when there is a better market window,” Lo said in the interim report.