China SOHO (0410.HK) booked US$190 million in first-day strata title sales from The Exchange office tower block it bought from Morgan Stanley in August 2009 for US$360 million, the company’s first foray into a mature property market outside its Beijing home base. The Hong Kong-listed developer recorded January-November total sales of US$1.8 billion, against its full-year sales target of US$732 million.
SOHO Chairman Pan Shiyi said the positive response the launch of The Exchange received “has proven that commercial properties in prime locations in gateway cities remain the safest investment.” The developer sometime ago shifted its focus from residential and mixed-use development to pure commercial saying at the time that the housing sector is run by policy and politics, and success in that market lies at the mercy of Beijing’s decision makers.
While commercial rentals have fallen both in Beijing and Shanghai over the last two to three quarters, the overall strength of the economy makes it hard for domestic and foreign companies to ignore, resulting in strong medium- to long-term demand for office space. SOHO has indicated that it will look for more opportunities in Shanghai’s as the city’s positioning as the China’s financial hub will be a positive catalyst for commercial developers.