CapitaLand enters joint venture to buy Shanghai office building for S$546.3 million

The property will be used as a seed asset for the group’s new commercial value-add fund.

Real estate company CapitaLand has formed a joint venture to acquire around 70% of Pufa Tower, a prime office building in Shanghai, China for an estimated S$546.3 million (¥2,752 million). The property will be used as a seed asset for the group’s new commercial value-add fund.

The 50:50 joint venture is formed with an unrelated third party. The purchase is the group’s first office property foray into Shanghai’s core Lujiazui central business district (CBD) in Pudong New Area. The buy will help support the new value-add fund CapitaLand is creating to invest in commercial real estates in key gateway cities in Asia.

Standing 34-storeys tall, Pufa Tower is located along South Pudong Road, Pudong, Shanghai and has three basement levels of car park. Following the deal, CapitaLand and its unnamed joint venture partner will take up levels 8 – 19 and 21 – 32, occupying a total gross floor area (GFA) of 41,773 square metres. The rest of the building – including the ground floor lobby and the refuge floor on level 20 – are co-owned with the Shanghai Pudong Development Bank.

CapitaLand thinks the office rental rates in Lujiazui CBD will continue to trend upwards over the next few years. The district, according to the group, fetches the highest office rents in Shanghai, and there is an “unabating demand” for office space as well as limited new office rental supply there.

Commenting on the deal, Mr Lucas Loh, president (China & investment management), CapitaLand Group said: “Pufa Tower is a prime asset to be seeded into the commercial value-add fund we are raising. We see significant potential in enhancing its asset value by upgrading specifications, tenant mix and improving operational efficiencies.”

Mr Loh noted that Shanghai is the top investment destination in China, with strong end-user demand for commercial properties. The acquisition of Pufa Tower, an operational asset, will immediately contribute to the group’s recurring income, he said.

Including the latest acquisition, CapitaLand now owns/manages 21 commercial properties in Shanghai, adding up to close to 1.9 million square metres in GFA.

CapitaLand’s shares jumped 2.29% by midday trading on Monday, up S$0.07, to S$3.13.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Updated
Change

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
China 300
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.