HONG KONG Feb 28 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
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
($1 = 6.1284 Chinese yuan)
(Reporting by Clare Jim; Editing by Matt Driskill)