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SOHO to acquire mixed-use project in Changning District
By Cherry Cao |
April 17, 2012, Tuesday
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Online Edition
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SOHO China announced today it has entered into an agreement to acquire a mixed-used project in western Shanghai's Changning District from two other Chinese developers.
SOHO, the biggest developer in Beijing's central business district, will pay 2.138 billion yuan (US$340 million) for the Tianshan Road development, which is 70 percent held by Greentown China Holdings Ltd and 30 percent owned by Maanshan Development, according to statements filed separately by SOHO and Greentown to the Hong Kong stock exchange.
The deal will give SOHO its 11th project in Shanghai while at the same time, enable Greentown, the largest builder in neighboring Zhejiang Province, improve its cash flow, the two companies said.
Lower property prices and sales volumes - consequences of restrictive regulatory policies - are hurting developers' profit margins and the ability to generate cash flow, meaning the homebuilding sector remains highly challenging for smaller local and regional operators, which have neither the scale nor liquidity to ride out the slow-down, Fitch Ratings said in a report today.
With a total built-up area of more than 172,200 square meters, the project will consist of high-end offices, retail facilities and a five-star hotel to be managed under the Hyatt brand, SOHO said.
With a focus on commercial real estate properties in prime locations, SOHO has so far invested more than 25 billion yuan in Shanghai.
SOHO remains extremely upbeat about Shanghai's office market amid robust demand and limited supply, its chairman Pan Shiyi said.
Grade A office rentals rose to an average 7.6 yuan per square meter per day in Shanghai in the first three months of this year, a quarter-on-quarter increase of 2.7 percent. Vacancy fell by 1.4 percentage points from the previous quarter to 5.6 percent during the same period, major international real estate services provider Savills said today.
SOHO, the biggest developer in Beijing's central business district, will pay 2.138 billion yuan (US$340 million) for the Tianshan Road development, which is 70 percent held by Greentown China Holdings Ltd and 30 percent owned by Maanshan Development, according to statements filed separately by SOHO and Greentown to the Hong Kong stock exchange.
The deal will give SOHO its 11th project in Shanghai while at the same time, enable Greentown, the largest builder in neighboring Zhejiang Province, improve its cash flow, the two companies said.
Lower property prices and sales volumes - consequences of restrictive regulatory policies - are hurting developers' profit margins and the ability to generate cash flow, meaning the homebuilding sector remains highly challenging for smaller local and regional operators, which have neither the scale nor liquidity to ride out the slow-down, Fitch Ratings said in a report today.
With a total built-up area of more than 172,200 square meters, the project will consist of high-end offices, retail facilities and a five-star hotel to be managed under the Hyatt brand, SOHO said.
With a focus on commercial real estate properties in prime locations, SOHO has so far invested more than 25 billion yuan in Shanghai.
SOHO remains extremely upbeat about Shanghai's office market amid robust demand and limited supply, its chairman Pan Shiyi said.
Grade A office rentals rose to an average 7.6 yuan per square meter per day in Shanghai in the first three months of this year, a quarter-on-quarter increase of 2.7 percent. Vacancy fell by 1.4 percentage points from the previous quarter to 5.6 percent during the same period, major international real estate services provider Savills said today.
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