SHANGHAI, June 12, Reuter – A Canadian construction company is building a $200-million North American-style exclusive suburb to the east of Shanghai which it hopes will become a centre of expatriate life in China’s -largest city.
The project by Canadian land developer Sealand Housing Corp involves the construction of 800 high-class homes on 410 acres (160 hectares) of reclaimed land 40 kilometres (25 miles) from central Shanghai, on the outer edge of the Pudong Development Zone.
Sealand, a subsidiary of Drewlo Homes, a privately-held firm based in London, Ontario, has bought a 70-year lease on the land and 2 plans to rent residences in the Shanghai Links Executive Development for between $7,000 and $15,000 a month.
The targets are senior expatriate managers who want to live away from the crowded, polluted central areas of Shanghai, which has a population of about 13 million.
The site – about an hour by car from central Shanghai, depending on traffic will feature the basic facilities required to attract the multinational expat family – an American school an 18-hole golf course and an American Club.
At this point, it is still largely a mud-flat, created from Yangtze River silt.
The outline of the Jack Nicklaus-designed golf course which will surround the community can just be seen.
Sealand’s vice-president Stuart Hansen said the company had decided to move into the Asian market starting with Shanghai, due to the quicker returns available compared to residential developments in North America.
“We have a 10 to 15-year investment time-frame on making a return.
“The norm in China is usually two to three years but as a North American development company we’re used to25-30 years. So we feel it is a reasonable return ratio,” he said.
He said the company paid. $40 million for 70 years of land-use rights beginning in 1999 and $80 million for the land reclamation.
Hansen declined to say how many commitments it had obtained from prospective tenants.
However, he said leases under discussion or option basically covered the entire first phase of 295 units.
The Pudong area, across the river to the east of central Shanghai, has attracted many international manufacturing firms, thanks to attractive tax breaks.
The city government also wants it to become Shanghai’s central business district.
But so far banks and finance companies appear reluctant to move there, de-spite large amounts of empty good-quality office space at bargain prices.
“It would give us added comfort if we had both the financial centre as well as the manufacturing industry although very early indications today are that the manufacturing sector would be sufficient (to fill the development),” Hansen said.
Current plans envisage the first 50 homes being ready for occupation by early next year and a total of 295 houses ready by mid-1998.
A foreign banker, who declined to be named, commended the basic idea behind the Shanghai Links development.
“It’ll be the first truly suburban-like living in Shanghai.
“As a concept, assuming the roads don’t get too crowded, I think it’s quite well positioned,” he said.
The banker said there had been some concern over financing, but company spokesman Mike Cayley said he was confident about the financing of the project.
One of the key draws for the development is that the Shanghai American School has been given 25 acres (10 hectares) by the developer at a nominal rent of one dollar a year to help attract foreigners to the area.
The plans call eventually for 2,000 students at the school, scheduled to open with room for 400 in about a year.
Cayley said the Shanghai development was planned as the first of a series of similar projects in different booming Asian cities, building suburban environments for expatriates.
“This is the first of 12 places around Asia in which we’re looking to build expatriate communities,” said Cayley.
Shanghai is intended to be jewel in the crown, but we’re also looking closely at similar developments in Beijing and Bombay.”
With safety concerns high among many foreign families in Shanghai following a number of kidnappings and burglaries in the past few years, security arrangements in the development will be very tight.
“Security has become an increasingly important factor for expatriates,” said Cayley. “There have been a number of incidents in which expatriates have been kidnapped, all resolved quickly. But it’s an issue.” REUTER