Cdl Jointly Acquires Mixed Use Development Site Shanghai Rmb894 Bil Chinese Partner Lianfa Group
Dear editors,
CDL, a leading real estate company, has recently announced the acquisition of a mixed-use development site in the prime Xintiandi area of Shanghai’s Huangpu district. This acquisition, worth RMB8.94 billion ($1.66 billion), was secured through CDL’s subsidiary, Chenghong (Shanghai) Investment, in partnership with Chinese company Lianfa Group. The site, spanning 27,994 square meters, was awarded to CDL on November 1st after a government land tender that closed on October 28th.
The cost of the site works out to be RMB117,542 ($21,827) per square meter per plot ratio (psm ppr), which is equivalent to $2,027 per square foot per plot ratio (psf ppr). The main reason behind this acquisition is that there have been no other residential site transactions in the Xintiandi area this year.
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In comparison, a residential site in Jing’an District sold for RMB114,000 psm ppr in September this year, while another residential site in Xuhui District sold for RMB131,000 psm ppr in August through a public tender. The recent Cuscaden Reserve site in Singapore was transacted at $2,377 psf ppr, while the Watten Estate Condominium site was sold for $1,723 psf ppr.
The Xintiandi site is a mixed-use development site with a total permissible gross floor area (GFA) of 76,027 square meters. CDL estimates that up to 77% of the GFA can be utilized for residential use, while 19% will be allocated for commercial purposes and 4% will be dedicated to public amenities. The residential portion of the site has a lease of 70 years, while the commercial portion has a lease of 40 years.
Chenghong Shanghai holds a controlling stake of 51% or RMB4.56 billion in the joint venture (JV) acquisition, while the remaining 49% is held by a subsidiary of Lianfa Group. Sherman Kwek, CEO of CDL, says, “Securing this prime plot of land in Shanghai’s famous Xintiandi area demonstrates our confidence in China’s long-term growth prospects. We are expanding our presence in this dynamic and populous nation by pursuing iconic placemaking opportunities in key tier 1 and tier 2 cities.”
This acquisition comes after CDL’s purchase of a development site in Suzhou last year and will further add to the company’s residential land bank in China. Kwek adds, “We are privileged to partner with Lianfa Group, and together, we look forward to creating a landmark that will redefine the city’s landscape.”
As of June 30th, CDL’s net gearing stands at 116% based on historical cost, while its interest cover ratio is two times. After incorporating this investment, the pro forma net gearing is expected to increase by 3.3% to 72.5%.
As of 1HFY2024, CDL’s total assets, including fair value of investment properties and hotels, stood at $33 billion, with the Chinese market accounting for 10%. With this acquisition, the pro forma segmentation will increase to 14%. On November 1st, CDL’s shares closed at $5.22, a 0.39% increase from its net asset value of $10.12.
This article was originally published in The Business Times.