SOHO China Limited (410.HK), among the most aggressive and highest profile commercial property developers in China, on April 19th announced the RMB2.47 billion acquisition of a mixed-use site near the Hailun Road station on Shanghai’s metro line 10 Subway in Hongkou District. According to a statement by the company, SOHO agreed to pay RMB2.47 billion to Hangzhou Ziyuan and Shanghai Jialian to acquire the project, which is now the company’s sixth project in Shanghai.
The Hailun Road project is bordered by Siping Road, Tianshui Road, Tongjia Road and Hailun Road. The site has an area of 28,103.3 m2, with an overall construction area of 152,032 m2 including above ground office and commercial area of 112,132 m2, and 39,900 m2 of underground commercial and auxiliary parking lot area. The project land is for mixed retail and office use.
The developer points out that the project is only 2.5 km from People’s Square in the city’s center, at the junction of subway Lines 10 and 4. Line 10 is renowned as Shanghai’s underground “Golden Corridor” and runs through Shanghai’s major commercial districts. Line 4 is Shanghai’s most central subway route providing access to both Puxi and Pudong. Adjacent to Sichuan North Road and the North Bund, the Project is surrounded by five-star hotels and new upscale developments of residential and office projects.
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The Hailun Station Project is SOHO China’s sixth project in Shanghai. On 1 April 2011 SOHO China successfully acquired a site on Caojiadu Road in Jingan District making this the second acquisition in less than one month. In less than two years time, SOHO China has spent over RMB12 billion, acquiring sites on Shanghai’s Nanjing West Road, the Bund, Hongqiao transportation hub, Huai Hai Middle Road, Changshou Road, and Sichuan North Road.
With the introduction of a series of central government regulations on the purchase of residential properties in major cities, trading volume in first-tier cities has declined significantly bringing investment demand in the housing market to a freezing point. Plans to construct 36 million units of subsidized housing over the next five years will fundamentally change the state of the Chinese housing market. However, in sharp contrast to the distressed state of the housing market, commercial real estate has remained strong throughout this period attracting a large amount of investment. According to the company’s statement, it has over RMB20 billion cash on hand, and sees 2011 as a year of acquisition opportunities.