Humbert Pang of Gaw Capital sees opportunity in western Shanghai. Image: Gaw Capital
Gaw Capital Partners has made its second Shanghai office acquisition in less than a month and a half, buying a set of four grade A office buildings in the Hongqiao area for a price reported to be close to RMB 2.8 billion ($390 million), according to sources familiar with the transaction who spoke with Mingtiandi today.
The Hong Kong-based private equity fund manager is purchasing the 60,807 square metre (654,521 square foot) office component of the MixC complex on Wuzhong Road in Shanghai’s Minhang district from China Resources Capital Management Ltd, according to an announcement by Gaw.
Gaw Capital, which is making the purchase from its Gateway Real Estate Fund VI, says that the asset will benefit from its proximity to the nearby Hongqiao transportation hub and from the high quality of the three-year-old commercial property.
Aiming to Enhance Office Values in Gubei
Gaw’s new Shanghai acquisition includes blocks A, B, C and D of Shanghai MixC, a set of quadruplet eight-storey buildings which provide a combined 56,950 square metres of office space augmented by another 3,857 square metres of first-floor retail space.
The Capital Markets team at Cushman & Wakefield in Shanghai acted as sole agents on behalf of China Resources Capital, the private equity real estate unit of China Resources Group for the disposal, which works out to a price of approximately RMB 46,000 per square metre.
Gaw bought a set of four matching office blocks in Minhang
According to the research team at Savills in Shanghai, average achievable effect rents at the MixC office buildings are currently RMB 5.5 per square metre per day and the occupancy is close to 95 percent.
“Followed by our previous acquisition of SKY SOHO in April 2018, Gaw Capital is confident in acquiring four premium Grade A office buildings (Block A, B, C & D) at Shanghai MixC, which presents an excellent opportunity to capture the growth opportunities arising from the Shanghai Hongqiao Transportation Hub,” Humbert Pang, Managing Principal and Head of China for Gaw Capital Partners said.
Sources at Gaw Capital told Mingtiandi that the company believes, given its experience with leasing Sky SOHO, which it acquired last year, it expects to be able to achieve average rentals of RMB 6 to RMB 7 per square metre per day and that the team is already signing new leases for the complex at RMB 6.
The list of current tenants at MixC reflects the Gubei area’s popularity with Korean and Japanese firms, with LG Chemical, Samsung Property and Casualty Insurance, and tech firm Samsung SDS Global SCL all making their corporate homes there. Gaw said that, while the group may make some touch-ups to the public areas of the complex it believes the current quality of the assets does not warrant major enhancements.
Buying Part of a Western Shanghai Mega-Complex
The office buildings are part of a 530,000 square metre mixed-use complex which includes the 240,000 square metre MixC mall, Shun Tak Holdings’ 188 room Artyzen Habitat hotel and the Shanghai Metro Museum.
China Resources Capital CEO Carl Qin
The complex, which was jointly developed by state-owned China Resources Land and Shanghai Shentong Metro Group (which operates the city’s metro system) is located about 10 minutes walk from the Ziteng Lu station on metro line 10 and is just over four kilometres south and east of Shanghai’s Hongqiao international airport at the intersection of Wuzhong Road and Hongjing Road in the Gubei area.
Although the shopping mall officially opened in 2017, the four office buildings were officially completed in 2015, after they had received LEED Gold Pre-Certification from the US Green Building Council. Shun Tak purchased the hotel component of the project in 2015 for RMB 700 million, before the structure was completed and subject to potential adjustments.
Gaw Bets on Mainland Offices
In its statement, Gaw emphasised its belief in the western Shanghai area as key to its investment thesis, saying that the acquisition “…presents an excellent opportunity to capture the growth opportunities arising from the Shanghai Hongqiao Transportation Hub.”
The transport hub, which includes the Hongqiao railway station as well as the airport, is nearly midway between the MixC complex and Sky SOHO, an Zaha Hadid-designed office complex where Gaw picked up a pair of commercial blocks last year for RMB 5.01 billion, in a team effort with Allianz Real Estate.
Since that time, Gaw went on to purchase another Shanghai office asset, the Ocean Towers office building on East Yan’an Road, which it acquired in November through its $1.3 billion Gateway Real Estate Fund VI, together with partners including Quadreal Property Group, for RMB 3 billion.
The private equity firm also has kept busy disposing office properties on the mainland in the last few months, after having sold Beijing’s Pacific Century Place to a fund controlled by Lianjia Real Estate founder Zuo Hui in the third quarter of last year for RMB 10.5 billion.