CDL jointly acquires mixed-use development site in Shanghai for RMB8.94 bil with Chinese partner Lianfa Group

By Douglas Toh

/ The Edge Singapore |

November 1, 2024 7:39 PM SGT

The mixed-use development site spans 27,994 sqm and can yield up to 77% of the GFA for residential use. (Photo: CDL)

City Development Limited (CDL), through its wholly-owned subsidiary, Chenghong (Shanghai) Investment along with its Chinese partner Lianfa Group have been awarded the tender for a mixed-use development site in the Xintiandi area in Shanghai’s Huangpu district for RMB8.94 billion ($1.66 billion).

The tender for the mixed-use development site spanning 27,994 square metres (sqm) was awarded on Nov 1, following a government land tender which closed on October 28.

The cost of the site works out at RMB117,542 ($21,827) per sqm per plot ratio (psm ppr), which is the equivalent of $2,027 per square foot per plot ratio (psf ppr). The rationale for the acquisition is that there is no other residential site transfer in the Xintiandi prime area this year.

A residential site in Jing'an District was transacted at RMB114,000 psm ppr in Sept this year, and another residential site in Xuhui District transacted at RMB 131,000 psm ppr in Aug, through normal public tender.

In comparison, the Cuscaden Reserve site in Singapore was transacted $2,377 psf ppr, and the Watten Estate Condominium collective sale was transacted $1,723 psf ppr.

The Xintiandi site is a mixed-use development site, comprising two plots of land separated by a public road in the middle, and has a total permissible gross floor area (GFA) of 76,027 sqm. CDL says that the future development can yield up to 77% of the GFA for residential use, with at least 19% allocated for commercial purposes and 4% designated for public amenities. The lease for the residential portion is 70 years, and for the commercial portion, the lease is 40 years.

Chenghong Shanghai holds a 51% controlling stake or RMB4.56 billion in the joint venture (JV) acquisition. The remaining 49% equity interest in this JV is held by a wholly-owned subsidiary of Lianfa Group.

Sherman Kwek, CDL group CEO, says, “The acquisition of this rare development site in Shanghai’s famous Xintiandi area represents the Group’s confidence in China’s long-term growth prospects. We are enhancing our presence in this dynamic and populous nation by targeting iconic placemaking opportunities in key tier 1 and tier 2 cities.

“On the back of our acquisition in Suzhou last year, securing this prime plot of land in Shanghai helps to further replenish our residential land bank in China. We are honoured to partner with Lianfa Group and together, we look forward to delivering an iconic landmark that will redefine the landscape,” adds Kwek.

As at June 30, CDL has a net gearing of 116% based on historical cost, and an interest cover ratio is two times.

The group reported net gearing including fair value of investment properties of 69.2% as at June 30, and this investment is expected to raise its pro forma net gearing by 3.3% to 72.5%.

As at 1HFY2024, the group's total assets including fair value of investment properties and hotels stood at $33 billion, with China accounting for 10%. The pro forma segmentation will increase to 14%.

Shares in CDL closed 2 cents higher or 0.39% up at $5.22 on Nov 1 compared to its net asset value of $10.12.

This story first appeared in The Edge Singapore.

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