The 21st Century Business Herald reported on May 27th that Vanke, one of China’s largest residential developers, (000002.SZ) has started selling units at several of its commercial property projects, with the first project being opened in Shanghai.
The move by Vanke is seen as a sign of major trend into commercial development, and the company now expects its commercial property investments this year may beat previous market estimates.
According to the company, demand for space at its first upscale commercial project, Vanke VMO in Shanghai, was so high over the weekend of May 21st-22nd that it managed to offload most of its office units.
Following the lead of other domestic developers such as SOHO China, Vanke is marketing its projects on a strata basis by selling off floors or other units in the buildings to individual investors who may use them for their own business or rent them out.
The developer is also expecting to soon start selling units at another project, Yingjia Center in Beijing.
Vanke Partnering with State-Owned Firms
Vanke VMO is a cooperation project between China Vanke and COFCO Ltd.’s property arm. The project covers a building area of 88,762 square meters and serves as China Vanke’s debut in the upscale commercial property sector in Shanghai.
China Vanke purchased the Beijing-based project from CITIC Real Estate Co. Ltd. for RMB 150 million last October. Renovation plans for the project have been approved by the Beijing Municipal Government, and are expected to be implemented later this year.
People with knowledge of the matter said China Vanke is looking to work with established marketing companies to help the developer promote its commercial property projects.
Vanke Aggressively Acquiring Sites
By August 2010, China Vanke had developed commercial property projects covering a combined area of three million square meters, including 600,000 square meters in Shanghai, China Vanke vice president Liu Aiming told reporters at the time.
Commercial property accounted for 20% for the developer’s projects last year, and that proportion is expected to grow over the next few years as China Vanke increases its activity in the sector.
In March last year, China Vanke beat out local rivals to acquire a 250,000 square meter land plot in Dongguan, Guangdong province after 136 rounds of tough bidding. The plot is designated for a 60-storey commercial project that the developer and local officials hope will become a local landmark.
China Vanke continued to invest in the commercial property sector this April and May, closing deals in Xi’an and Wuhan.
“China Vanke has just started in the commercial property sector, which will make money for the developer as long as it [China Vanke] has land, human resource and capital at hand,” said Gao Gang, an analyst at China Real Estate Information Corp.
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