Keppel Land Exits Shanghai Apartment JV with Gemdale in $112M Sale

A unit of Singaporean conglomerate Keppel Corp is selling its stake in a residential development project in Shanghai’s suburban Jiading district for RMB 783 million ($112.3 million), exiting the joint venture it formed two years ago with local developer Gemdale Properties.

Keppel Land China, through its wholly-owned subsidiary Gadius Pte Ltd, is transferring its 15 percent interest in the 1,651-unit Upview residential development project to Shanghai Jindi Jinli Industry Development Co Ltd, according to a regulatory filing on Monday. Jindi Jiinli is fully owned by Gemdale’s Shanghai branch, public records show.

“The divestment is in line with Keppel’s Vision 2030 asset monetisation plans to unlock capital which can be channelled towards new growth opportunities,” a company spokesperson said on Tuesday. “We are positive on [Shanghai’s] long-term outlook and continue to look out for growth opportunities as part of our strategy to be an asset-light provider of innovative and sustainable urban space solutions.”

The transaction marks Keppel’s latest move to shake up its residential portfolio in China, after the company exited the Sheshan Riviera luxury housing project in Shanghai’s Songjiang district in October and then partnered with a mainland investor to buy a stake in a 576-unit condominium project in Jiading from local developer Gemdale the following month.

Stepping Back After Two Years

Keppel Land China is divesting 100 percent of its equity interest in Shanghai Fengwo Apartment Management, which owns Taicang Xinwu Business Consulting, an entity that in turn owns a 15 percent equity interest in the 8.4-hectare (20.8 acre) Upview project.

Upview represents a joint venture forged in December 2020 between Keppel Land, Gemdale and Shenzhen Shengjun Investment Management, a Guangdong-based company with links to Keppel Corp’s largest investor, Temasek Holdings, and other Singapore entities. Gemdale held a 55 stake percent in the venture at the time, while the remaining 30 percent was held by Shenzhen Shengjun, a holding company in which Singapore’s Temasek Holdings had a two percent interest.

Through the sale, which is expected to close by the end of the year, Keppel Land China will receive cash compensation of RMB 135 million, a figure 11.6 percent higher than the project’s net asset value of RMB 121 million as of December 12. The buyer will complete Keppel’s payment by assuming RMB 662 million in debt associated with the project.

Jointly developed by Keppel Land China and Gemdale, the Upview project is envisioned as a modern and green residential community that will feature 163,460 square metres (1.76 million square feet) in gross floor area across 20 high-rise apartments and 14 low-rise buildings.

The complex is located at the junction of Panan and Shengzhu Roads, about 600 metres away from the North Jiading station on Metro Line 11. Keppel’s half-year financial resultsissued in July, indicate that development of the project is ongoing, with completion of the first phase expected in the second half of 2022.

Keppel and Gemdale launched sales in December of last year, with the initial tranche of 287 units selling out on the project’s opening day. As of the end of June, all 1,561 available units had been sold, with the 85 homes purchased between January and June trading at an average price of RMB 51,300 per square metre, according to the most recent data reported by Keppel.

Even after exiting a major residential development, Keppel Land China continues to view Shanghai as one of its focus cities, according to a company spokesperson.

Gemdale had not responded to queries from Mingtiandi by the time of publication.

Still Bullish on Shanghai

Keppel’s exit comes a month after the company joined up with an unidentified mainland investor to buy a 20 percent stake from Gemdale in a residential project in Jiading, roughly 30 minutes’ drive from the Upview site.

Following the RMB 344 million acquisition, the partners plan to develop the new parcel into a 93,871 square metre residential complex consisting of eight condominiums of 18 storeys each and a 16-storey, 24-unit affordable housing tower that can yield a total of 624 new homes.

In October, Keppel Land China sold its subsidiary Shanghai Jinju Real Estate Developmentwhich owns the Sheshan Riviera residential development in Songjiang district, for RMB 967 million.

Situated on a 170,000 square metre plot along the Waiqingsong Highway with about an hour’s drive to the Upview site, the high-end villa project was acquired by local builder Shanghai Dongyuan Real Estate Development. The Keppel Land China spokesperson noted that 112 of the project’s planned 217 units had already been completed at the time of the sale.

The latest Shanghai divestment adds to S$4.4 billion worth of assets that Keppel Corp has offloaded between September 2020 and October 2022, putting the Singapore conglomerate on track to surpass its divestment target of S$5 billion by the end of 2023.

“To further advance its transformation into an asset-light urban solutions provider, Keppel Land is working to substantially monetise its landbank in China and Vietnam over the next 1-2 years,” Keppel Corp said in its latest business update in October.