SINGAPORE - Developer CapitaLand and sovereign wealth fund GIC have joined forces to buy Shanghai's tallest twin towers for 12.8 billion yuan (S$2.54 billion).
The skyscrapers are on 4.05 hectares along Huangpu River in North Bund and soar 263 metres above the fast-growing business district.
They will become CapitaLand's third Raffles City in Shanghai, the company said on Tuesday (Nov 13) The other two are Raffles City Shanghai, which opened in 2004, and Raffles City Changning, which opened last year. It will also bring the total number of Raffles City developments to 10 - nine in China and one in Singapore.
The latest addition will be an integrated development, with two 50-storey Grade A office towers linked at the base by a seven-storey shopping mall. Excluding its car park, Raffles City in North Bund has a total gross floor area of 312,717 sq m.
The towers offer panoramic views of Shanghai Bund and the Lujiazui central business district on both sides of Huangpu River. In addition, they are linked directly to Line 12 and the upcoming Line 19, two major metro lines with the highest number of interchange stations in the city.
Raffles City in North Bund is expected to open in phases from the second half of 2019. This will give CapitaLand the "speed to market in the competitive Shanghai market, which continues to power ahead", CapitaLand Group president and chief executive Lee Chee Koon said yesterday.
The acquisition is being carried out by Raffles City China Investment Partners III, in which CapitaLand owns 41.7 per cent. This entity has formed a 50:50 joint venture with GIC for the purchase. The remaining interests in the Raffles City fund are held by investors from Asia, North America and the Middle East.
The move comes as CapitaLand continues to strengthen its foothold in China, including in its key gateway cities.
Mr Lee noted that the company is the foreign developer with the largest portfolio under management in the Shanghai market.
"In line with our long-term belief in China, we will stay invested through market cycles to reap the compounding effects on our investments," added Mr Lee.
CapitaLand has divested almost $2 billion worth of assets in China this year. It now boasts 20 commercial properties in Shanghai with a gross floor area of around 1.8 million square metres. Eight are integrated developments with both office and retail components.
Shanghai is among the core city clusters under CapitaLand's strategy for China, which also includes Beijing-Tianjin and Guangzhou-Shenzhen. Property investment in the city jumped by 83 per cent year-on-year in the first nine months of 2018 to hit 23.5 billion yuan. Around 1,300 multinational corporations have their headquarters in Shanghai.
North Bund, in particular, recorded a 10 per cent rise in the average rent of Grade A offices in the first nine months of this year, outpacing the citywide growth rate, according to real estate consulting firm CBRE.
GIC, which set up an office in Beijing in 1998, has said that it is staying committed to China despite various risks.
The sovereign wealth fund has benefited from being an early and steady investor in the country, chief executive Lim Chow Kiat said at a forum in Beijing last month (Oct). The challenges include credit excesses built up since the global financial crisis, as well as the worsening United States-China trade war.
Hence, GIC's long-term stance does not mean taking a rigid position, said Mr Lim. China accounted for 19 per cent of GIC's Asia ex-Japan portfolio as at March 31 this year.
