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Macquarie arm cuts price of property

(China Daily/Agencies)
Updated: 2009-01-06 07:49

An investment arm of Australia's Macquarie Group Ltd has slashed prices by about a third from levels quoted nine months ago for one of its top-end Shanghai properties, underlining the difficulties investors face exiting China's cooling real estate market.

The residential development is being put on the block with a price tag of around 300 million yuan ($43.84 million), according to sources with direct knowledge of the plan.

Macquarie is trying to sell City Apartments, a 16,000-sq m residential development in downtown Shanghai, which the Australian bank fully acquired in 2005, the sources said.

Macquarie decided to sell the project more than half a year ago for around 26,000 yuan per sq m, but it failed to find a buyer at that price, said the sources who declined to be identified before a deal is made.

More recently, Macquarie cut its price to less than 20,000 yuan per sq m. It hopes to lure an institutional buyer who will purchase the entire block in cash, said the sources.

One source noted that the price could be as low as 18,000 yuan per sq m now.

"Given the market has been down so much and it is going to fall further as most people believe, it is very tough to sell any property at a good price these days," said one of the sources, a potential buyer who had reviewed the project.

A Chinese private equity house and a Singaporean firm have shown interest, although talks are still at a primary stage.

A spokesman for Macquarie Group, the parent company, declined to comment.

Home prices have dropped by more than 30 percent in some Chinese cities and industry analysts have warned of more falls as the global financial crisis deepens.

Morgan Stanley plans to sell at least two high-end serviced apartment projects in Shanghai, which are wholly owned by its real estate fund, for several billion yuan, Reuters reported in June.

However, Morgan Stanley has not secured any buyer for the properties, said the sources.

Meanwhile, some global investors including Goldman Sachs and Blackstone Group LP see China as a top pick in Asia's property market after Japan.