A Shenzhen-listed real estate company set a Shanghai land price record yesterday when it bought a 13,709-square-meter plot in Huangpu District that's slated for commercial and office development.
Winning bidder Suning Universal Co Ltd beat nine other competitors from home and abroad when it offered 4.4 billion yuan (US$578.9 million) for the Nanjing Road E. parcel. Based on the project's gross floor area, the price works out to nearly 67,000 yuan per square meter, almost double market estimates of around 30,000 yuan.
Starting bids were set at 1.8 billion yuan.
"The final price for the land plot, even taking its prime location into account, surprised me," said Remy Chan, national director at Jones Lang LaSalle, a global real estate services provider. "However, the winner, compared with the other bidders, boasts superior retail experience in the local market and that could help explain its strong confidence in the project."
Suning Universal and Suning Appliance Co Ltd, the country's second-biggest home appliance chain, are two independent companies whose chairmen are brothers, according to Sun Weiming, president of Suning Appliance.
The bidding process took less than an hour, with the primary competition pitting Suning against a Hong Kong property firm, The Wharf (Holdings) Ltd. Other interested buyers included Sun Hung Kai Properties Co Ltd and Tishman Speyer Properties, industry sources said. The news media were not allowed at the bidding site.
Colliers International, another leading international property services provider, said the surprising outcome reflects the strong demand for office space in general as well as the scarcity of premier quality office/retail sites in the downtown Puxi area.
The city's top-grade office buildings such as Plaza 66 in Jing'an District and Raffles City in Huangpu fetch net effective average rents of around US$1.30 per square meter per day. And due to limited supply in downtown Puxi in the coming years, rents for premium office developments in prime locations such as Huangpu District are expected to rise by 20 percent annually, according to Colliers.