• Developer wins two state land auctions for Shanghai sites in the past three weeks in signs of optimism for Yangtze River Delta plan
• Land bank and properties in Shanghai amount to 75 billion yuan, or 70 per cent of the group total assets

Shui On Land is planning to take on more urban redevelopment projects in Shanghai after winning two prime sites at state land auctions in the past three weeks, making the city its next source of earnings growth.

The builder paid 1.86 billion yuan for a piece of 15,258 square metre site at HongShouFang in Putuo in a winning bid on November 1. That followed an earlier auction on October 31, when its 3.88 billion yuan offer for four parcels of land totalling 90,059 square metres in Xujing Town, Qingpu district topped rival bids.

The two acquisitions will bring its assets in Shanghai to more than 75 billion yuan (US$10.7 billion) or about 70 per cent of the Hong Kong-listed group’s assets, making it one of the biggest landlords in the city. The rush to replenish its Shanghai land bank underscores its optimism in the Yangtze River Delta Integration Plan, a state-mandated growth strategy to connect the city and its neighbours in the region into an integrated business and trading hub.

“The city has ample opportunities for micro redevelopment,” Jessica Wang, managing director of Shui On Management, said in an interview. “In New York, London and Tokyo, we see the restoration of cultural and commercial elements as the future trend. It will be one of the directions for Shanghai’s development. This trend will create major development opportunities in China’s first-tier cities.”

The concept echoes President Xi Jinping’s call this month, exhorting developers and local governments to commit to restoring old areas and respecting their historical buildings. Xintiandi, translated as New Heaven and Earth, as a former rundown longtang residence transformed by the developer some three decades ago, will be a perfect template to follow, Wang said.

“Urban renewal will be a better way to maximise the use of land resources in city centre, particularly in Shanghai where prime land is becoming rare,” Wang said. “In future, Shanghai is unlikely to see a large scale urban regeneration involving massive demolition and rebuilding developments.”

While detailed renovation plan is still under study, some proposals include preserving the vintage elements of the HongShouFang – which used to be a community of 1,000 longtang residences – in its redevelopment plan.