Scheme Description: City Centre Phase 3 is a development site where
theCompany intends to construct a 77,512 square metre mixed –use
property,with six storeys of retail floor space and 15 floors of
officeaccommodation.
Location: Zunyi Road, Hongqiao, Shanghai
Heart of Hongqiao Business and Commercial District
Well serviced by road and public transport (close to the Hongqiao Airport)
Site Area (sqm): 9,538
Total GFA (sqm): 77,512
Construction start date: Sept 07
Construction end date: Dec 09
5期
City Centre (Phase 5), Hongqiao, Shanghai
Type: Investment Acquisition
Scheme Description: Phase 5 of City Centre includes a 20 storey Grade A office and 3 storey luxury retail development.
Location: Zunyi Road, Hongqiao, Shanghai
Heart of Hongqiao Business and Commercial District
Well serviced by road and public transport (close to the Hongqiao Airport)
Site Area (sqm): 18,770
Total GFA (sqm): 75,444
注腳：
LuxChina Property Development Company Limited successfully bid for City Centre Phase 5 in
2007 and a confirmation letter was signed with the relevant government bureau. However at
31 December 2007, the land use right transfer contract had not been signed and the land use
right certificate had not been obtained.
City Centre - 5 Hongqiao Retail/office 75,444 5% 3,772 72 1%
研究報告：
City Centre 1, 3 and 5 (value RMB 6,108m, 71% of property
portfolio)
City Centre (CC) is a mixed-use investment and development property in the Hongqiao
district of Shanghai.
Business plan
City Centre 1 (CC1, GFA 170,155 sq m) is an existing retail and office development; City
Centre 3 (CC3, GFA 103,762 sq m) and City Centre 5 (CC5, 75,444 sq m, GFA 5% owned) are
mixed-use (retail and office) development sites that, when built, will link into CC1. The plan
for City Centre is to develop CC3 and then refurbish and reposition CC1; CC5 is being
developed by LVMH.
The combined impact of the schemes is to more than double, via a combination of increased
GFA (c.60%) and higher rents, the rental income from the asset.
The sites (CC1, CC3 and CC5) are adjacent to each other and will be linked to each other via
bridges. As part of the development process, CREO will position/reposition the retail offering
on CC1 and CC3 into a mid-high end market position from CC1’s mid-to-low market
position. The development and refurbishment process is expected to complete in 2010 (i.e.
around two and a half years).
Hongqiao district
CW reports that the opening of Metro 2 (December 2006), the planned opening of Metro 10
(by 2010) and the development of the Hongqiao Transport Hub (by 2010) are having a
significant impact on the attractiveness of the Hongqiao district. The Transport Hub, based
around the existing Hongqiao airport, includes a number of metro links, a planned extension
of the Maglev currently serving Pudong International Airport, and an expansion of Hongqiao
airport’s capacity. The Hub is 15 minutes drive (in normal traffic) from the district’s CBD.
C&W reports that Hongqiao rental value growth had lagged the other business districts
because of its lack of transport infrastructure. C&W describes the district as well developed
with comprehensive supporting facilities and amenities. However, the retail offering in the
local is mainly mid or mid-to-low end, with only one high-end retail destination. The
district has an estimated 7% (191,298 sq m) of Shanghai’s Grade A office stock. CREO owns
c33% of the district’s Grade A office stock.
The Hongqiao retail offer is currently pitched at the mid and mid-to-low end of the market; the
only high-end destination is the Friendship store. Cloud Nine, completed in 2006, is the largest
shopping centre in the district and is described as an example of a failed shopping centre, as a
result of poor management, inappropriate interior circulation and an unsuitable tenant mix.
Development timetable, costs and impact
The development CC3 is expected to start by the end of 2007 and complete in December
2009 at a cost of RMB 1.7bn (c.￡110m). The start of construction is conditional on the
completion of site clearance and the receipt of new/amended land-use rights. The
refurbishment of CC1 is expected to start in January 2010 and complete by August 2010
and cost RMB 116m (c￡7.5m).
The refurbishment and development process (which increases GFA by c.60%) is expected to
more than double City Centre’s annual gross rental income, at current rental values, from
c.RMB 270m (c.￡17.5m) to c.RMB 660m (c.￡42m).
The refurbishment of CC1 (to International Grade B+) has been timed to dovetail with the
completion of CC3 (to International Grade A-). This enables CC1’s retail space to continue to
trade during the construction period (CC1’s tenants to be decanted into CC3) and for the
maximum RVG impact from the repositioning to be achieved. Construction of CC5, the
LVMH building, is expected to complete by March 2009. The key risk to the development
timetable is the completion of the clearance of the CC3 site and the receipt of the
necessary alternations to the planning permissions.
--------------------------------------------------- ALAN
