Property group CapitaLand said it will acquire office development Guozheng Centre in Shanghai for 2.64 billion yuan (S$537 million). Based on a total gross floor area (GFA) of 80,701 sq m, this translates to an investment of 32,713 yuan per sq m, the mainboard-listed company said in a statement yesterday.

CapitaLand will also divest Innov Tower, an eight-year-old office building in Shanghai's Xuhui District, to an unrelated party for 1.56 billion yuan. This works out to 38,500 yuan per sq m, based on a total GFA of 40,445 sq m. The divestment is expected to generate net profits of about $85 million. Both transactions are expected to be completed this month.

"China continues to be a core market attractive to CapitaLand," said Mr Lim Ming Yan, president and group chief executive of CapitaLand. "The divestment of Innov Tower allows us to unlock and realise the value of a stabilised asset at an optimal stage of its life cycle, while the acquisition of Guozheng Centre allows us to immediately redeploy the capital to another quality income-generating asset."

On completion of the transactions, CapitaLand will have a portfolio of commercial assets under management in Shanghai made up of over 1.3 million sq m of GFA across 17 properties.

CapitaLand China chief executive Lucas Loh said both properties are located in different key business districts, "which are seeing strong demand from companies keen to locate in Shanghai but away from the increasingly crowded city centre". Shanghai is part of five clusters CapitaLand has identified for growth, comprising Beijing/Tianjin; Shanghai/Hangzhou/Suzhou/Ningbo; Guangzhou/Shenzhen; Chengdu/ Chongqing/Xi'an; and Wuhan.

CapitaLand shares yesterday ended two cents higher at $3.58.