Singapore's CDL pays US$973m for Chinese developer, Shanghai asset stakes

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Singapore-listed City Developments Limited (CDL) has agreed to buy a 24% stake in Chinese developer Sincere Property Group and a majority stake in one of its Shanghai commercial assets for a combined RMB 6.7bn (US$973.3m).

The deal marks CDL’s single largest investment in China and expands the firm’s geographical presence from 3 cities to 20, the buyer said in an announcement.

CDL will pay RMB 5.5bn for its stake in Sincere, gaining board representation as it becomes the firm’s second-largest shareholder after the target’s founder and chairman Wu Xu.

The Singaporean property firm also purchased a 70% interest in Sincere’s Shanghai Hongqiao Sincere Centre, a prime commercial asset in the heart of Shanghai’s Hongqiao CBD, for RMB 1.2bn.

The 35,739 sq.m. property includes offices, serviced apartments, a retail component and a basement carpark.

“Rapid urbanisation, economic growth and rising disposable incomes will continue to drive demand for real estate in China,” said CDL CEO Sherman Kwek.

“Leveraging Sincere’s development and asset management capabilities, local expertise and wide geographical presence in China, CDL will be able to significantly boost its scale and accelerate its growth in this huge market with a substantial portfolio and pipeline of development projects and investment properties.

“Moreover, there is tremendous potential to develop fund management platforms via Sincere’s existing portfolio and through new acquisitions.”

The transaction raises CDL’s portfolio allocation to China from 9% to 15% and adds business parks and serviced apartments to its portfolio mix in the country.

The firm will also gain access to a substantial landbank with 12.6m sq.m. of gross floor area across 70 development projects.

Sincere has development and asset management capabilities for residential, retail, office, serviced apartment, business park and large-scale mixed-use developments.

It also manages an investment portfolio including 14 malls totalling 700,000 sq.m., 536 serviced apartments and five hotels with about 1,400 rooms.

CDL has a portfolio of residences, offices, hotels, serviced apartments, integrated developments and shopping malls.

The company is also developing a fund management business and is aiming to reach US$5bn in assets under management by 2023.