SOHO China Limited announced on May 6th the signing of a RMB3.2 billion acquisition agreement with Shanghai Trio Property Development Company Limited for the transfer of a commercial property on Shanghai’s Zhongshan West Road. The property, Shanghai New World Changning Commercial Center, includes two office buildings as well as underground space and is SOHO’s most expensive acquisition to date.
The property, which is to be renamed SOHO Zhongshan Plaza, occupies an area of 16,176 m2, and is zoned for commercial and office use. The GFA of the project is 142,184 m2 of which 100,199 m2 are for office use and 12,664 m2 are for commercial use. The seller, Shanghai Trio Property Development, is a China-based subsidiary of Hong Kong’s New World Development Co Ltd.
The acquisition of the SOHO Zhongshan Plaza project is the third such major asset purchased in Shanghai since April 1st. The projects acquired by SOHO earlier this year include SOHO Caojiadu on April 1st, and SOHO Hailun on April 19th, and the company has now made seven major acquisitions in Shanghai within the last two years with an accumulated investment total of RMB14.7 billion.
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The acquisitions are part of what the company calls its strategy to focus on commercial property in Beijing and Shanghai’s prime locations situated along major transportation networks. Pan Shiyi, Chairman of SOHO China, said: “Commercial real estate has great potential. Looking at the rate of rental yield alone, where apartments and homes earn 3%, commercial real estate earns at least 6%, effectively doubling profits. There is no more important indicator in the market.”
According to a company statement, it currently has more than RMB20 billion cash in hand and has set a target of making RMB 15 billion in acquisitions during 2011.
Situated along Zhongshan West Road, close to the intersection with Hongqiao Road in Shanghai’s Changning District, SOHO Zhongshan Plaza is 2 km away from Zhongshan Park and the Xujiahui business district and approximately 8 km away from the Hongqiao Transportation Hub.