Jones Lange LaSalle China Property Market Monitor – January 2009

Monday, February 2, 2009 12:51
Posted in category Invest in China
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This month’s JLL China Property Market Monitor offers a mix of bad and good, with a lot of coverage on ground breaking ceremonies.

The most interesting part of the report for me though came in the report’s only mention of Shanghai, a paragraph on Morgan Stanley’s poorly performing Shanghai portfolio and their recent decision  to bundle their Shanghai properties as a portfolio sale rather than as individual assets:

Morgan Stanley’s original strategy in Shanghai was to acquire properties with the aim to remodel and resell them.  However, some of these assets have so far underperformed.  In 2005, Morgan Stanley acquired Shanghai Plaza, re-fitted and renamed it Infiniti.  It is currently one of the most vacant retail projects in downtown Shanghai.

Why I found this paragraph so interesting is just that it is simply overstating how well this building is doing.  the history of this building is as the dog of Huai Hai road (see my post on the closure of Lane Crawford for more) .

It is a building that I once looked at on behalf of an investment group in 2004, and in 2005 some of us observed just weeks before the announcement that Morgan had bought the building, and what struck me was that there were spaces that had been open for 2 years since the previous time I had visited the area on behalf of another client looking to rent space  – next to McDonald’s

In the end, I suspect that Morgan’s move to sell their assets as a portfolio  is the right move though, as it does hold title to some really nice properties in town, and offering a mix of good and bad will certainly attract more interest than the alternative.

.. and for anyone interested in taking up the portfolio, also take a look at their quasi-Nanjing Road property (rep is Colliers) very closely.  It is the dog of Nanjing Road that will require investors work with the government to take up the computer factory in front (owned by a former mayor’s family), knock it down, and build a landscape that is nice on the eyes and allows for automobile access.  For without it, executives (who make the final decision on rental contracts) cannot park their GL8/ Audi.

.. and for anyone interested in learning more about the Shanghai property market, Shanghai Doldrums does a good job of digesting a recent Colliers report.

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