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Mega developments the wave of the future
By Cao Qian |
September 27, 2011, Tuesday
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Print Edition
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FOR Emilia Cheung, 30, a marketing manager from Hong Kong who has been working in Shanghai for more than three years, the newly unveiled Kerry Parkside in Huamu, Pudong New Area, is a favorite place to hang out in her leisure time.
The 330,000-square-meter development comprises retail shops, restaurants and clubs, a five-star hotel, serviced apartments and luxury office suites.
"It's just a few metro stops away from where I work and live," Cheung said. "I can easily find fun things to do there when I need to kick back and relax. Either with friends or just by myself, it's a great place to spend an evening or a weekend afternoon."
Cheung said she visits Kerry Parkside at least twice a week to browse, have a meal or meet friends in a bar.
Kerry Parkside represents the latest trend in urban mega-property development, called HOPSCA in China. The acronym is shorthand for hotels, offices, parks, shopping malls, clubs and apartments – the key elements integrated into one expansive site.
The trend started in downtown redevelopment areas and is fast spreading to outlying areas of Shanghai.
"By 2013, around 50 HOPSCA projects, with a combined size of 13.8 million square meters, are expected to be open, almost doubling the city's existing stock," said Margaret Ng, research director at E-Commercial China, a major commercial property services provider. "And the majority of new supply will be located in Puxi."
Puxi is on the west side of the Huangpu River. According to E-Commercial, the Hongqiao Business Park overlapping the western Shanghai districts of Changning, Qingpu and Minhang, will account for about a quarter of the new floor space devoted to HOPSCA projects in the next three years. Jiading District development will contribute 16 percent of the growth, followed by Xuhui and Putuo districts.
Shanghai's first HOPSCA development was completed more than 20 years ago with the opening of the Shanghai Center - an 185,000-square-meter landmark project on Nanjing Road W., across from the Shanghai Exhibition Center.
By the end of last year, 32 HOPSCA projects were open for business, with combined area of 7.7 million square meters. About 96 percent of the projects were built between 2005 and 2010, E-Commercial data showed.
Such rapid growth invariably will breed fiercer competition in this segment, according to industry analysts.
"Shanghai has been witnessing really fast development of HOPSCA properties over the past six years as a result of rapid urbanization, and that dynamic growth will probably continue for the next five to 10 years," said Robin Rao, director of consultancy services at E-Commercial China.
"With newcomers looking aggressive, developers will certainly find themselves involved in more intense competition."
Dalian Wanda Group, one of China's largest commercial real estate developers, has announced plans to replicate its Wanda Plaza concept, a HOPSCA-style development, to 70 sites across the country by the end of next year.
Annual rental income from such projects is forecast to reach 7 billion yuan (US$1.1 billion), the company said.
In Shanghai alone, the company already has three Wanda Plazas under operation: in northeastern Wujiaochang, Zhoupu in Pudong and northwestern Jiangqiao. A fourth one, located in northern Baoshan District, is scheduled to open in mid-2012, the company said.
COFCO Commercial Property Investment Co, a subsidiary of state-owned conglomerate COFCO Corp., said late last year that it plans to double its portfolio of Joy City mega projects to around 20 in the next five years. The company opened its first Joy City mall in Shanghai late last year on downtown Xizang Road N.
Different developers have different strategies for HOPSCA projects. Some focus on major gateway cities, while others concentrate on second- and third-tier cities. Some target the trend-savvy younger generation of customers, while others cater more to mainstream consumers.
But extensive master planning, a good tenant mix and strong property management are common ingredients necessary for success, industry people said.
"With more of these projects under way, higher pressure is placed on the management of HOPSCA projects," said Fanny Leung, vice president of marketing at Chongbang Group, which began to develop its first mixed-use commercial project in the northern Zhabei district in 2003.
"Finding enough good tenants has become a major challenge as we and others expand our footprints to other parts of China," she said.
Chongbang now has three HOPSCA projects in the Shanghai area, all branded under the LifeHub logo – one each in Daning of Zhabei, Jinqiao of Pudong and Anting of western Jiading. The company is seeking new opportunities in southern parts of Shanghai and in expansion to neighboring provinces.
In July, the company acquired a land site in the city of Kunshan in neighboring Jiangsu Province, its first LifeHub project outside of Shanghai, Leung said.
The 330,000-square-meter development comprises retail shops, restaurants and clubs, a five-star hotel, serviced apartments and luxury office suites.
"It's just a few metro stops away from where I work and live," Cheung said. "I can easily find fun things to do there when I need to kick back and relax. Either with friends or just by myself, it's a great place to spend an evening or a weekend afternoon."
Cheung said she visits Kerry Parkside at least twice a week to browse, have a meal or meet friends in a bar.
Kerry Parkside represents the latest trend in urban mega-property development, called HOPSCA in China. The acronym is shorthand for hotels, offices, parks, shopping malls, clubs and apartments – the key elements integrated into one expansive site.
The trend started in downtown redevelopment areas and is fast spreading to outlying areas of Shanghai.
"By 2013, around 50 HOPSCA projects, with a combined size of 13.8 million square meters, are expected to be open, almost doubling the city's existing stock," said Margaret Ng, research director at E-Commercial China, a major commercial property services provider. "And the majority of new supply will be located in Puxi."
Puxi is on the west side of the Huangpu River. According to E-Commercial, the Hongqiao Business Park overlapping the western Shanghai districts of Changning, Qingpu and Minhang, will account for about a quarter of the new floor space devoted to HOPSCA projects in the next three years. Jiading District development will contribute 16 percent of the growth, followed by Xuhui and Putuo districts.
Shanghai's first HOPSCA development was completed more than 20 years ago with the opening of the Shanghai Center - an 185,000-square-meter landmark project on Nanjing Road W., across from the Shanghai Exhibition Center.
By the end of last year, 32 HOPSCA projects were open for business, with combined area of 7.7 million square meters. About 96 percent of the projects were built between 2005 and 2010, E-Commercial data showed.
Such rapid growth invariably will breed fiercer competition in this segment, according to industry analysts.
"Shanghai has been witnessing really fast development of HOPSCA properties over the past six years as a result of rapid urbanization, and that dynamic growth will probably continue for the next five to 10 years," said Robin Rao, director of consultancy services at E-Commercial China.
"With newcomers looking aggressive, developers will certainly find themselves involved in more intense competition."
Dalian Wanda Group, one of China's largest commercial real estate developers, has announced plans to replicate its Wanda Plaza concept, a HOPSCA-style development, to 70 sites across the country by the end of next year.
Annual rental income from such projects is forecast to reach 7 billion yuan (US$1.1 billion), the company said.
In Shanghai alone, the company already has three Wanda Plazas under operation: in northeastern Wujiaochang, Zhoupu in Pudong and northwestern Jiangqiao. A fourth one, located in northern Baoshan District, is scheduled to open in mid-2012, the company said.
COFCO Commercial Property Investment Co, a subsidiary of state-owned conglomerate COFCO Corp., said late last year that it plans to double its portfolio of Joy City mega projects to around 20 in the next five years. The company opened its first Joy City mall in Shanghai late last year on downtown Xizang Road N.
Different developers have different strategies for HOPSCA projects. Some focus on major gateway cities, while others concentrate on second- and third-tier cities. Some target the trend-savvy younger generation of customers, while others cater more to mainstream consumers.
But extensive master planning, a good tenant mix and strong property management are common ingredients necessary for success, industry people said.
"With more of these projects under way, higher pressure is placed on the management of HOPSCA projects," said Fanny Leung, vice president of marketing at Chongbang Group, which began to develop its first mixed-use commercial project in the northern Zhabei district in 2003.
"Finding enough good tenants has become a major challenge as we and others expand our footprints to other parts of China," she said.
Chongbang now has three HOPSCA projects in the Shanghai area, all branded under the LifeHub logo – one each in Daning of Zhabei, Jinqiao of Pudong and Anting of western Jiading. The company is seeking new opportunities in southern parts of Shanghai and in expansion to neighboring provinces.
In July, the company acquired a land site in the city of Kunshan in neighboring Jiangsu Province, its first LifeHub project outside of Shanghai, Leung said.
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