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The purchase of Guozheng Center by its wholly-owned subsidiary CapitaLand China works out to 32,713 yuan (S$6,628) psm based on the development’s gross floor area (GFA) of 80,701 sqm. (Photo: CapitaLand)
CapitaLand announced on Thursday (1 June) that it is buying an office building in Shanghai and divesting another one in the same city for a combined value of 4.2 billion yuan (S$854.92 million).
Its wholly-owned subsidiary CapitaLand China has agreed to purchase the Guozheng Center, a newly completed office project in Shanghai’s Yangpu District, from unrelated parties for 2.64 billion yuan (S$535 million). This works out to 32,713 yuan (S$6,628) psm based on the development’s gross floor area (GFA) of 80,701 sqm.
At the same time, CapitaLand has entered into a contract to sell the Innov Tower, an eight-year-old office building in Shanghai’s Xuhui District, to an unrelated party for 1.56 billion yuan (S$316 million), or 38,500 yuan (S$7,800) psm based on the property’s GFA of 40,445 sqm.
This is also expected to generate net profits of around S$85 million after the property was acquired by the company in 2008 and opened in March 2009. Among the office buildings in Caohejing Hi-Tech Park, it currently commands one of the highest rents.
“China continues to be a core market attractive to CapitaLand. The divestment of Innov Tower allows us to unlock and realise the value of a stabilised asset at an optimal stage of its life cycle, while the acquisition of Guozheng Center allows us to immediately redeploy the capital to another quality income-generating asset,” said CapitaLand’s President and Group CEO Lim Ming Yan.
“On completion of the two transactions, CapitaLand will have a sizeable portfolio of commercial assets under management in Shanghai at over 1.3 million sq m in GFA across 17 properties.”
These include shopping centre CapitaMall Qibao and seven integrated projects – LuOne, Hongkou Plaza, Minhang Plaza, Capital Square, Raffles City Shanghai, Raffles City Changning and Capital Tower Shanghai, along with seven serviced residences.
Lim added that the larger footprint in Shanghai would put CapitaLand in a favourable position to take advantage of the bright outlook of this top-tier city, which is poised to surpass Hong Kong as Greater China’s biggest office market by 2020.
Furthermore, Shanghai is among five city clusters in China that CapitaLand is bullish on. These are Wuhan, Beijing/Tianjin, Guangzhou/Shenzhen, Chengdu/Chongqing/Xi’an and Shanghai/Hangzhou/Suzhou/Ningbo.
As of 31 March 2017, first-tier and second-tier cities accounted for around 93 percent of CapitaLand’s overall property value in the country.
This article was edited by Denise Djong.
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