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August 19, 2009

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Home » Business » Real Estate

SOHO nets 1st Shanghai deal

SOHO China, a real estate developer, yesterday announced it has acquired an office building in downtown Shanghai's Jing'an District for 2.45 billion yuan (US$359 million) from the real estate arm of Morgan Stanley.

The building, located on Nanjing Road W., is the first investment deal in Shanghai made by SOHO China, whose operations are mainly in Beijing.

"This is a very important step for SOHO China as it marks the official entry of the company into Shanghai's commercial property market," Pan Shiyi, chairman of SOHO China, told a telephone conference yesterday. "We will definitely keep looking for more opportunities in the city in the future."

SOHO China will send its team to Shanghai after the acquisition to market sale and leasing activities. Ultimately, the Beijing-based developer hopes to sell the 52-story building, to be renamed SOHO Donghai Plaza, by the end of next year.

"That can be a quite good strategy for SOHO China to make profit as no Grade-A office buildings in the area are available for strata-title sales at the moment," said Jim Yip, head of investment for DTZ's north China operations. "The project can be extremely attractive for cash-affluent domestic companies as the prime location and high quality of the building will greatly improve their corporate image."

In fact, while the city's office buildings continued to see declining rents and rising vacancies, some recovery signs are already emerging in the sales market as the transaction volume of existing offices soared 70 percent in Shanghai in the second quarter from the January-March period, according to Century 21 Real Estate, operator of the city's second-largest property brokerage.

Morgan Stanley Real Estate bought Donghai Plaza for about 2 billion yuan in late 2006 and renamed it The Exchange. The average rent is between 8 yuan and 12 yuan per square meter per day.


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