Emerging Industries to Haul Demand of Industrial Parks in Tier-one Cities; Financially-stressed Developers to Face Restructuring with Potential Quality Projects Surfacing to The Public
On July 14th, Inspur announced to acquire the Zhigu Building (“the Property”), which is located in Beiqing Road Tech Innovation Development Zone in northern part of Zhongguancun Science City, for a total consideration of RMB906 million.
Sited 300 metres away from Daoxiang Lake Subway Station of Metro Line 16, The Property has a total GFA of 30,822.51 sq m, including 26,583.46 sq m of office and warehousing space and 4,239.05 sq m of underground parking space. Upon the completion of the acquisition, the Property will be the headquarter of Inspur.
Haidian Beiqing Road Submarket is located in Zhongguancun Science City, nearby Zhongguancun Software Park, Changping Future Science City, and a few other scientific and technological research highlands. Undertaking the role as an international technology innovation centre and part of collaborative development with Haidian District and Changping District, Zhongguancun Science City provides multiple favorable policies and financial subsidies to enterprises settling within the park. Further, many renowned research institutes, such as Peking University and Tsinghua University, can also be found within the vicinity, making Zhongguancun Science City to be one of the most resourceful information industrial hubs nationwide.
According to the “Fourteen Five Construction Plan of Beijing International Science and Technology Innovation Centre”, Zhongguancun Science City is striving to become a key economic driver in Beijing. By 2025, the number of high-tech enterprises in Zhongguancun Science City targets to reach 12,000 with total industrial output expected to exceed RMB1.3 trillion.
As of Q2 2022, the Haidian Beiqing Road Submarket recorded a vacancy rate at 9.2%, the lowest among all BP submarkets. Correspondingly, the rental level in the area increased nearly 0.6% quarter on quarter (QOQ) to RMB124.3 per sq m (psm) per month.
Looking forward, the Haidian Beiqing Road Market is expected to continuously attract hi-tech enterprises thanks to the advantageous policies and scientific research resources of Zhongguancun Science City.
In July, ESR purchased “Yango Zhangjiang NEO” (the Project) in Zhangjiang Pharma Valley of Zhangjiang Science City from Yango Group. With a total GFA of around 8,940 sq m, the Project is situated at No.103 Cailun Road in Pudong District. It enjoys convenient transportation access with Zhangjiang Road Station of Metro Line 13 and interchange station Guanglan Road Station of Metro Lines 1 and 2 locating merely 1.3 and 1.5km away from the Project, respectively. The Project was originally named “Gaichen Business Centre”, and was later redeveloped and renamed as “Zhangjiang NEO” by Distrii and Hitone Capital in August 2019. In November 2019, Yango Group, took over the Project and further upgraded and rebranded as “Yango Zhangjiang NEO”. Re-entered the market in April 2020, the Project is now occupied by life science industry giants, such as Antengene Pharmacy R&D Centre, Hisoar Pharmaceutical, etc.
Shanghai has been vigorously promoting the development of life science industry, and has been actively alluring enterprises in the field to settle and set up presence in the city. Considering the strict requirements on R&D, manufacturing and office space, demand on qualified life science business parks (“life science BPs”) has been relatively robust in recent years. Mature projects with EIA are generally fully occupied with strong rental growth.
Underpinned by the brilliant outlook of life science industry, investors’ sentiment toward life science BPs remains strong. The high clusters of industry leaders, R&D institutions, universities, and talents are also reasons behind the high popularity of Zhangjiang’s life science BP market. In recent years, Zhangjiang’s life science BP market has recorded a fair amount of en-bloc transactions, reflecting the continuous investment preference. In addition, as Zhangjiang Science City gradually expands its scale, emerging life science BP submarkets in the surrounding, such as Medical Valley and Medical Equipment Manufacturing Base, are expected to receive spill-over demand from the Zhangjiang Pharma Valley.
On July 27, KWG Group announced to sell 50% equity of a jointly-owned project company (project company) along with its respective shareholders loan for HKD1.3 billion. The buyer was Juntion Development Hong Kong (Holding) Limited, a subsidiary company indirectly wholly-owned by Longfor Group Holdings Limited. Per the announcement, the project company owns a residential development site located at No.11 Muk Tai Street, Hong Kong. As of the announcement date, the development has been completed, with a total saleable area of approximately 500,000 square feet.
Note: the exchange rate on July 27, 2022: 1 HK$ ≈ RMB0.8629; 1 square foot ≈ 0.0929 square meter.
Since last year, financially-stressed domestic real estate enterprises are constantly divesting assets to retrieve funds. Between June to July 2022, CITIC Group took over four projects including Shenzhen Nanshan Dongjiaotou Project from a domestic real estate enterprise. AMCs, such as Huarong, Cinda and Great Wall, are also setting up rescue funds or platforms to actively participate in resolving real estate projects that are in risk. Presently, the residential real estate is facing headwinds, and is on a downward momentum. On the contrast, investors are keeping eyes on debt-stressed enterprises, targeting those who own quality projects in key cities and striving to seize opportunities in obtaining high-quality projects with ideal prices.