Morgan Stanley sells Shanghai apartment project

SHANGHAI: US investment bank Morgan Stanley has sold its serviced apartment project in Pudong, Shanghai, for about 1.2 billion yuan (RM571.15 million), making it the second-largest residential deal by value in the city so far this year.

Morgan Stanley Real Estate Fund has sold the 284-unit Pinnacle Century Park adjacent to the Lujiazui financial district to JP Morgan Greater China Property Fund, according to people familiar with the deal.

The price tag represents about 26,000 yuan per square metre, against the cost of 18,000 yuan per square metre that Morgan Stanley paid in 2006.

One person involved in the deal said it was time for Morgan Stanley Real Estate Fund to take profit and redistribute the earnings to investors.

The deal, in which property consultant DTZ acts as the agent, would be the second-largest residential sale by value in Shanghai after Goldman Sachs sold its Shanghai Garden Plaza for 2.24 billion yuan, or 23,039 yuan per square metre, to Shanghai Forte Land early this year, Savills said. Shanghai Garden Plaza has a gross floor area of 97,227 sqmetres.

Mirae Asset Financial Group's sale of serviced apartment Shama Luxe Xintiandi to Shui On Construction and Materials for 929 million yuan, or 58,824 yuan per square metre, ranked third. Mirae Asset is the largest equity fund manager in South Korea.

"Lots of international funds are still looking for acquisition opportunities, but they are not as active as two years ago," said Albert Lau, executive director at Savills China. He said the global financial crisis and the deepening debt problems in Europe had given investors more challenges in raising funds.

Douglas Sung, head of portfolio management at JP Morgan Greater China Property Fund, did not deny the acquisition. "I'm busy and let's talk later," he told the South China Morning Post.

In 2008, JP Morgan Asset Management raised US$600 million (RM1.93 billion) for the Greater China property fund. The closed-end fund received capital commitments from institutional and high-net-worth investors from the United States, Asia, Europe and the Middle East.

The fund will be invested across all real estate sectors in the mainland, Hong Kong, Macau and Taiwan. Its primary focus is developing new properties and investments will be made in the office, residential, retail and hospitality sectors by creating project-level joint-venture arrangements with multiple operating partners in Greater China.

It seeks to capitalise on the mainland's rapid economic growth, urbanisation, rising income levels and strong demand for real estate.

Morgan Stanley declined to comment on the deal. — South China Morning Post