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On 29 November, Shui On Land Ltd announced that its subsidiaries, Chongqing Shui On Tiandi Property Development Co, Ltd and Shanghai Xintiandi, have entered into a Framework Agreement with Sunshine Life Insurance to sell the office premises (total GFA of 119,534.46 sqm) and 815 underground car parking spaces at Lot B11 of Chongqing Tiandi, also known as Corporate Avenue 2, for a total consideration of RMB 2,412,421,970 (approximately HKD 3,053,698,696). Jones Lang LaSalle acted on behalf of Shui On Land and concluded this transaction. Core office assets, especially those centrally located, stabilized assets with strong income, continued to be the most sought-after asset class in China. For the first three quarters this year, the total commercial transaction volume in China has exceeded RMB 85.66 billion, surpassing the full-year volume in 2012 (RMB 73.06 billion). Among the total volume, office assets counted approximately 54% of the transactions, compared to 52% in 2012. Until November, Jones Lang LaSalle has concluded several other en-bloc office transactions besides the sale of Corporate Avenue 2 at Chongqing Tiandi, including: • Acted on behalf of Forterra Trust to sell Central Plaza, located at People’s Square, Shanghai, at approximately RMB 1.67 billion;• Acted on behalf of Ascendas to sell Ocean Tower, located at Huangpu District of Shanghai, at approximately RMB 1.9 billion;• Acted on behalf of Sino-Ocean Land and Swire Properties to sell Pinnacle One, located at the prime area of Chengdu’s CBD, at approximately RMB 2.1 billion. We expected China’s full-year commercial transaction in 2013 to pass RMB 100 billion, with the percentage of office investment to remain high. This trend will be carried on to 2014, with office property continuing to be the favored asset type for investment in China. In 2013, most investors preferred to buy office properties in Tier 1 markets, such as Shanghai and Beijing. Tier 1 transactions accounted for 81% of commercial transactions in the first three quarters of 2013, up from 72% in 2012. Next year, we expect to see more investors return to key Tier 1.5 markets, such as Chongqing and Chengdu, as confidence in the domestic economy returns and as institutional investors try to find higher yields outside of the increasingly expensive Tier 1 markets.
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