Plans for the district, south of the former World Expo site, are centred on the development of office space but also call for a substantial amount of retail space, as well as residential housing, in order to develop Qiantan into a business “community”.

The district is currently in the early stages of development. Land has been cleared and sold to developers, and several projects have already broken ground. Much of the transportation infrastructure has already been completed. Government plans expect Qiantan to be largely completed by 2020, with 3.5 million sq. m of commercial and residential real estate.

Qiantan is shaped like a boot, with the laces facing to the left. The area is centred on the Oriental Sports Centre, which was completed in 2010, and is connected to three Metro lines. The riverside – the “face” of the boot – is a long greenbelt, while the interior and perimeter areas will become an office district. A significant amount of retail space will also be developed, along with amenities such as international schools and hospitals, as well as high-end apartments. These amenities are part of the master plan to develop the area into an “international community”, which will attract multinational companies.

To date, the highest-profile developers to enter Qiantan are Tishman Speyer, who will construct a mixed-use building, and Swire Properties, who plan a commercial complex, both in the core area next to the Oriental Sports Centre metro station. Developer Hongkong Land also plans a mixed-use complex. The Lujiazui Group, which led the development of the Lujiazui area, is in charge of the area’s overall development, and has created joint ventures with all three of these developers.

Transportation will be a major benefit to Qiantan. In addition to the abovementioned metro lines, the area will be served by the Middle Ring Road (which forms the area’s southern boundary) and Jiyang Road (which forms the eastern boundary and directly connects to the North-South Elevated Road). Construction on the South Longshui Road Tunnel, which will connect Qiantan directly to Puxi, is expected to begin in 2016.

In this paper, Colliers has analysed public government plans, land sales contracts, and promotional material from developers active in this area, as well as undertaken surveys of local consumers and an analysis of the area’s current retail options to ascertain the area’s current situation. Colliers has drawn on its own database of the Pudong office market and consulted with its commercial real estate experts in order to analyse demand in this district, in addition to fundamental macroeconomic research specific to Pudong. The residential component analysed completed land sales, public remarks by a Lujiazui senior executive, Shanghai’s past residential market performance and the Lujiazui Group’s master plan.

Finally, Colliers Research has undertaken a survey of a number of retailers and office tenants from across 20 industries to create a picture of the current impression of Qiantan among prospective tenants.

Qiantan’s Residential Market

Qiantan will have a residential component in addition to its commercial development, primarily aimed at affluent buyers and investors in Shanghai’s luxury residential market. In 2014, the former general manager of the Lujiazui Group, Yang Xiaoming, was quoted in Eastday newspaper as saying that the area will become an “international community” of 25,000 residents, with foreign nationals accounting for more than 60% of the total population. The article has since been re-posted on an official Shanghai government website, though no further public statements about the demographic mix or how it will be achieved have been publicly made.

Residents

Detailed information about the residential component of Qiantan is scarce. Colliers expects the housing here to be targeted at high net worth individuals and investors, based on a review of completed land sales contracts, Lujiazui Group’s master plan and a comparison with similar residential developments in other areas of Shanghai.

Yang Xiaoming, the former general manager of the Lujiazui Group, has said that a portion of the residential development will only be available for lease, in order to attract foreign nationals (presumably employees and managers of companies who lease office space in Qiantan), who are likely to prefer leasing to purchasing. Indeed, contracts for two completed land sales stipulate that units will be available for lease only. However, given the large volume of planned housing, it is expected that the majority of residential units will be offered for sale. No further details have been made public thus far.

Plans for the area show that a total of 8,300 residential units (877,000 sq. m) will be built in Qiantan by 2022. Construction began on three sites in 2014 and the first wave of supply (1,531 units, or 146,000 sq. m) is scheduled to complete in 2017, followed by an additional 4,100 units (434,000 sq m) in 2018.

Qiantan as a High-End Residential Community

A review of the completed sales contracts for four residential land sites shows that the average accommodation value for these plots is more than RMB63,100 psm. Based on Colliers’ valuation model, this suggests that units at these developments will sell for approximately RMB110,000-130,000 psm.

This strategy would be consistent with other residential developments alongside the Huangpu River. In 2014 and 2015, areas along the Huangpu River (North Bund, Lujiazui Binjiang, Huangpu Riverside and Xuhui Binjiang) accounted for 52% and 29% of the sales volume of houses above RMB80,000 psm respectively, in terms of total transacted area. In 2015, the sales volume of this segment in these locations nearly doubled compared with 2014’s level, demonstrating the strong demand for luxury riverside housing in Shanghai.

View the entire research report on Colliers International here.