Recently, Kailong investment acquired 100% equity and creditor's rights of a wholly owned subsidiary controlled by Financial Street with RMB1.58 billion, taking over a portion of the Desheng International Centre. Desheng International Centre is in Deshengmen area, adjacent to the North Second Ring Road with superior accessibility and visibility. The total gross floor area of the development is about 229,500 sq m. Kailong acquired approximately 38,000 sq m of the development with multiple property types from office to retail, car parks and other facilities. Tenants from the technology and catering sectors are taking up the majority of the occupancies.
Under the hovering epidemic, institutional investors' sentiment toward commercial properties in tier-one cities remains strong. Limited land supply in these cities has made urban renewal a new trend on the market. Desheng International Centre boasts relatively high upgrading potential considering Deshengmen area being adjacent to two major submarkets in Beijing, namely, Zhongguancun and Financial Street submarkets; the former is one of the highly sought-after submarkets in the city with the lowest vacancy rate whereas the latter boasts the highest citywide rental rate. Underpinned by its strategic location, Deshengmen area is likely to undertake the spillover demand from those tenants who seek to expand business or reduction in operation cost. Additionally, this transaction also reflects that current investors not only favour the core assets in core locations, but also have keen interest in those with upgrade potentials in regional and developing business districts.