New investment model aids entry to Chinese property market

US$525 million or S$716 million may not be a small number but still one that a property giant like Keppel Land is able to afford. They have however entered into a co-investment deal with Insurer and asset manager Allianz, to buy a 100% stake in Hongkou Soho.

Photo credit: Kengo Kuma and Associates

Shanghai a key growth area

Hongkou Soho is a mixed use building with office and retail units situated in Shanghai’s Hongkou District. It holds 70,042 sq m of leasable space in total. Office and retail spaces take up 65,304 sq m and 4,738 sq m respectively. In this collaborative effort, Keppel’s Alpha Asia Macro Trends Funds III (AAMTF III) holds a 40% stake. The remaining 60% is split between Keppel Land China and Allianz. The latter 2 are investors in the former and Allianz is optimistic about investing in the Chinese market with a local expert like Keppel Land.

Known as the commercial centre of China, Shanghai is a key growth area which many investors are flocking to. It’s commercial real estate market is growing rapidly. The central business districts of Puxi and Pudong will expand in the future. In light of this, Shanghai would definitely serve as a worthy gateway. Keppel Land has indicated that this co-investment arrangement is in line with Keppel Capital’s investment strategy. It may be a matter of time before more co-investment agreements make their way into the Chinese market.