Soho China to sell two Shanghai office properties for less than asking price
HONG KONG Feb 28 (Reuters) - Chinese developer Soho China Ltd said on Friday it is selling two commercial buildings in Shanghai for a total of 5.23 billion yuan ($853 million), lower than the initial asking price, at a time of excess supply in the city.
Soho China is selling equity interests and related loans in SOHO Hailun Plaza and Soho Jingan Plaza in China's commercial capital to Financial Street Holdings.
The developer had put the two properties, together with another one also in Shanghai, on the market in November for 10 billion yuan, analysts said.
"The final price is obviously much lower than what they had asked and slightly lower than the market price, but it still looks reasonable," said Philip Tse, an analyst of Kim Eng Securities.
Rents for lower-grade offices and in non-core locations in Shanghai have been declining because of oversupply and poor management, but rents for top-grade offices in core the central business district remained robust, property agent Centaline's commercial sector general manager Raymond Wei said.
"Office (space) by nature is very much cyclical in China in particular, because most new CBD commercial buildings have 2-3 million square feet," said Nicholas Wong, principal of real estate investment solution provider Townsend Group.
"It takes two to four years to absorb the whole building and other buildings will have to cut rents in order to maintain the occupancy," he said, "but when net absorption is back up, then the growth will resume again."
Shares of Soho China climbed 0.7 percent at 0622 GMT after the announcement, versus a 0.21 percent gain in the broader market.
($1 = 6.1284 Chinese yuan)
(Reporting by Clare Jim; Editing by Matt Driskill)
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