HANGZHOU (July 1): The recently opened Raffles City Hangzhou rises dramatically across the scenic Qiantang River at Hangzhou’s CBD. It is in good company, located near the Hangzhou Grand Theatre, the international conference centre and soon-to-be-built government municipal centres.
Designed by renowned Dutch architect Ben van Berkel, RCHZ features two 60-storey towers for Grade A office buildings, a shopping mall, a five-star hotel and serviced residences.
It was this organic, twisty and futuristic-looking design that led RCHZ to open only in April instead of 2015 as scheduled.
Still, the project is likely to provide its investors with an internal rate of return in the teens.
CapitaLand is selling strata title units at rising prices with the latest office units going at RMB40,000 psm (S$8,124 psm), up from an average of RMB35,000 psm.
CapitaLand paid RMB3,600 psm for the 40,355 sqm site. Including land cost, development cost was less than RMB10,000 psm. This compares favourably with the latest land sales at RMB20,000 psm at nearby sites.
RCHZ now comprises 298,276 sqm of gross floor area of which 40% is retail, 13% office and 24% hospitality. Strata units in parts of the tower blocks with names familiar to Singapore private homebuyers like Sky Habitat and Sky Vue are available for sale.
Meanwhile, CapitaLand’s malls have also experienced an evolution of sorts. At RCHZ, 35% of space is devoted to F&B.
With e-commerce big in Hangzhou — it is after all the home of Alibaba — malls must attract shoppers by providing an “experience”.
Case in point: RCHZ has a flight simulator. Shoppers can spend 15 minutes as a fighter pilot taking off on a runway and shooting enemy fighters. Or they could try their hand at driving around hairpin bends on mountainous roads they would otherwise not attempt.
CapitaLand also opened the retail component of Raffles City Shenzhen. The mall at RCSZ has committed occupancy of 99% and 95% of the shops are opened. RCHZ’s mall has committed occupancy of 95%.
Executives from CapitaLand say that shopper traffic averages 20,000 to 30,000 on weekdays and around 50,000 on weekends for both malls.
Raffles City Changning in Shanghai has also opened. With the three Raffles Cities, CapitaLand says it is the foreign developer in China with the largest portfolio of integrated properties. It owns and manages 23 integrated developments with over 6.2 million sqm of GFA in tier 1 and 2 cities.
Lim Ming Yan, CEO of CapitaLand, says “As more of these integrated developments open and turn fully operational, it will position CapitaLand well to expand our recurring income base to deliver sustainable returns with positive effect on out ROE. As at 31 March 77% of CapitaLand’s total assets contribute to recurring income of which shopping malls and integrated developments form the bulk.”