Shui On Land raises stake in Shanghai growth prospects after winning two prime sites in state auctions

By Pearl Liu pearl.liu@scmp.com / https://www.scmp.com/business/article/3038429/shui-land-raises-stake-shanghai-growth-prospects-after-winning-two-prime?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | November 26, 2019 11:57 AM SGT
Shui On Land is planning to take on more urban redevelopment projects in Shanghai after winning two prime sites at state land auctions in the past three weeks, making the city its next source of earnings growth.
The builder paid 1.86 billion yuan for a piece of 15,258 square metre site at HongShouFang in Putuo in a winning bid on November 1. That followed an earlier auction on October 31, when its 3.88 billion yuan offer for four parcels of land totalling 90,059 square metres in Xujing Town, Qingpu district topped rival bids.
The two acquisitions will bring its assets in Shanghai to more than 75 billion yuan (US$10.7 billion) or about 70 per cent of the Hong Kong-listed group's assets, making it one of the biggest landlords in the city. The rush to replenish its Shanghai land bank underscores its optimism in the Yangtze River Delta Integration Plan, a state-mandated growth strategy to connect the city and its neighbours in the region into an integrated business and trading hub.
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"The city has ample opportunities for micro redevelopment," Jessica Wang, managing director of Shui On Management, said in an interview. "In New York, London and Tokyo, we see the restoration of cultural and commercial elements as the future trend. It will be one of the directions for Shanghai's development. This trend will create major development opportunities in China's first-tier cities."
Jessica Wang, managing director of Shui On Management, a subsidiary of Shui On Land. Photo handout alt=Jessica Wang, managing director of Shui On Management, a subsidiary of Shui On Land. Photo handout
Best known for its iconic Xintiandi retail and entertainment project on the Huaihai Road shopping belt, Shui On Land is hoping to replicate Shanghai's old charm in the commercial redevelopment of the HongShouFang site, according to Wang, who is a Shanghai native.
The concept echoes President Xi Jinping's call this month, exhorting developers and local governments to commit to restoring old areas and respecting their historical buildings. Xintiandi, translated as New Heaven and Earth, as a former rundown longtang residence transformed by the developer some three decades ago, will be a perfect template to follow, Wang said.
"Urban renewal will be a better way to maximise the use of land resources in city centre, particularly in Shanghai where prime land is becoming rare," Wang said. "In future, Shanghai is unlikely to see a large scale urban regeneration involving massive demolition and rebuilding developments."
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While detailed renovation plan is still under study, some proposals include preserving the vintage elements of the HongShouFang " which used to be a community of 1,000 longtang residences " in its redevelopment plan.
The office and retail complex is expected to cost about 3 billion yuan including the land cost, and due for completion in late 2023, the company said. It will consist of 50,000 square metres of office space, 13,000 square metres of retail space and 20,000 square metres underground area. (Xintiandi has 50,000 square metres of retail space).
People walking at the Bund overlooking the financial district of Pudong in Shanghai in November 2019. Photo: AFP alt=People walking at the Bund overlooking the financial district of Pudong in Shanghai in November 2019. Photo: AFP
The Xujing Town land bank in Qingpu district is located near the National Exhibition and Convention Centre, the venue for the China International Import Expo in Hongqiao area. Shui On expects to develop the residential site in stages, with the first batch of homes slated for sale by the end of 2020 or early 2021, it said.
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The company owns 80 per cent of the interest in the project, while 20 per cent is held by two independent parties, according to company statement.
"This plot is located in an area that is undergoing very fast development," Wang said. "It will create a strong demand for residential market."  
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.
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