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Mori Group plans to sell commercial space in Shanghai

Mori Group plans to sell commercial space in Shanghai

Write: Bernadette [2011-05-20]

A girl walks past China's tallest building, Shanghai World Financial Center (right). The building's developer, Japan's Mori Group, has decided to sell its office separately. [Photo / China Daily]

SHANGHAI - In a break from its traditional "only for rent" operation of commercial properties, Japanese Mori Group, the developer of China's tallest building , the Shanghai World Financial Center (SWFC), decided to sell its office separately.

The 492 meter high skyscraper has been plagued with a high vacancy rate ever since it started to canvass for clients after completing the project in August 2008.

After wading through the financial crisis, the iconic building was able to raise its occupancy rate to more than 70 percent, according to Mori Building China (Shanghai).

However, statistics from the real estate service company DTZ Holdings show that Shanghai's average office rent was 7.14 yuan ($1.08) per square meter (sq m) a day by the end of 2010, with an occupancy ratio of 92.39 percent citywide.

As a result, to sell them a la carte to interested premium clients is not a bad idea, it said.

"Since the completion of our building, we have received many enquires from our clients to buy office space for their own use, and the latest deal is at the call of such requirement," said a personnel surnamed Pan, who is in charge of Mori Building China (Shanghai) media relations.

Pan told China Daily that the sale of the office unit is after many considerations including Mori Building China (Shanghai)'s intention to further invest in Shanghai, which requires a steady capital flow.

The first to sign a deal with Mori is Tomson Group, a property developer founded in Taiwan but managing most of its assets in Shanghai.

In a statement filed with the Hong Kong Exchanges & Clearing Ltd, Tomson Group said it acquired the 72th floor of SWFC, roughly 3,221.87 sq m of gross floor area, for 267 million yuan, and the unit price was 83,000 yuan.

Tomson regained the spotlight after developing the nation's most expensive residential property Tomson Riviera.

The luxury property is currently priced at between 150,000 and 160,000 yuan a sq m, according to Susan Li, a senior employee from the company.

Chen Sheng, deputy director of the China Real Estate Index System, a real estate research institute, said usually office building is sold at a much higher price than residence.

"Currently, commercial properties will be the next investment hotspots as China continues the economic boom. So Tomson's deal is very promising," added Chen.

In order to maintain high quality management of the office building, no sale or transfer will be allowed for a period of seven years from the date of the agreement, the announcement said.

According to Xue Jianxiong, an analyst from the China Real Estate Information Corporation, the deal between Mori Group and Tomson has a lot to do with financial pressure for new investment.

The total investment of the building is 8.3 billion yuan, and if Mori Group sells fewer than 40 floors of its more than 60 story office floors, the company will recover all its costs, Xue added.

Shares of Tomson Group dipped 3.24 percent to 2.99 yuan on the Hong Kong Stock Exchange on Thursday.