After years of delay, the Chinese city may finally get it.

Defying unease about eye-catching skyscrapers since the Sept 11 terror attacks, a developer said it will resume work this month on a glass office tower that will be the world's tallest building.

Construction of the Shanghai World Financial Centre started in 1997 but soon stopped as a financial crisis swept Asia. The site in the centre of the city's new Pudong financial district has been a gaping pit ever since.

While the developer struggled to raise money, city officials sounded upbeat, promising that construction of the building would resume.

'The Shanghai World Financial Centre will become a building matching the city's position as a world financial centre,' said a statement in February last year by the Pudong district government.

The original blueprint called for a height of 460 m, topping the current record holder - Malaysia's 452-m Petronas Twin Towers.

Tokyo-based Mori Building Co said it has since changed the planned height, though the company and the city government refuse to disclose the new goal until an official ribbon-cutting ceremony next Thursday.

But 'it will be the tallest building in the world', Mori spokesman Toru Nagamori said.

For that aspiration to be fulfilled, the Shanghai building must be taller than the 508 m of the Taipei Financial Centre, which is being built in Taiwan.

It also faces competition from New York, which has chosen two possible designs that call for the city to construct the world's tallest building to replace the World Trade Center that was destroyed in the Sept 11, 2001, attacks.

One design has a pair of buildings towering at 507 m while the other plans a tower of 541 m.

The future of super-tall buildings was in doubt after the Sept 11 attacks.

Several projects, including a tower planned by developer Donald Trump in Chicago, have been scaled back.

Experts said concerns about terrorism are a low priority in Shanghai, which is eager to become a business centre to rival New York City or Tokyo.

Of greater local concern has been the new skyscraper's signature feature - an enormous round hole through the building near its pinnacle.

A few in Shanghai said the hole resembled the rising sun flag of the building's Japanese developer, raising the still raw issue of Japan's World War II occupation. The city and Mori refused to discuss the criticisms.

On a poster near the construction site, the tower and its hole looked more like a gigantic bottle opener.

The new skyscraper will join a Shanghai skyline already crowded with futuristic buildings, many featuring sections shaped as orbs, discs and other eye-catching geometry.

The building will overshadow its neighbour, the 88-storey Jinmao Building - China's tallest skyscraper and the third tallest in the world.

Most of the new tower will be office space, although 10 floors near the top will hold a hotel. Mr Nagamori refused to say how much, if any, of the building's planned space had been leased. --Associated Press     7 February 2003

World's tallest building

• The original blueprint for the Shanghai World Financial Centre called for a height of 460m, topping the current record holder - Malaysia's 452m Petronas Twin Towers.
• Tokyo-based Mori Building Co has changed the planned height but both the company and the Shanghai government have refused to disclose the new goal until an official ribbon-cutting ceremony next Thursday. However, Mori insists that its project ''will be the tallest building in the world''.
• To achieve this, the Shanghai building must be taller than the 508m height of the Taipei Financial Centre being built in Taiwan.
• Shanghai will also be competing with New York City, which is considering two plans to replace the World Trade Center with a building which is either 507m or 541m tall.

China's top skyscraper aims to defy property slump 

The newest skyscraper in Shanghai's Lujiazui financial district has already reached a 45-per-cent occupancy rate, with tenants including Sumitomo Mitsui Banking Corp., Mizuho Corporate Banking Corp., BNP Paribas and Commerzbank, Japan's Mori Building Co. said.

"There is some chaos in the global financial markets, but I'm confident it will not affect Shanghai's financial environment," Mori Building chief executive Minoru Mori told a news conference at the 101-storey tower.

He added that the company expected to recoup its investment on the $1.14-billion tower, which is 10-per-cent owned by Wall Street bank Morgan Stanley, within 12 years. His high hopes for the skyscraper contrast sharply, however, with a severe slump at many of its potential tenants, as U.S. and European banks such as Morgan Stanley and Lehman Brothers reel from the subprime debt crisis. Concerns are also mounting that a slowing Chinese economy will sap demand for homes and office space, threatening to end an eight-year real estate boom, while the government has moved to curb lending to developers to suppress speculation in the once red-hot market.

At the same time, competition is heating up as a steady succession of new office towers spring up in Shanghai's financial district, from developers including Hong Kong's Sun Hung Kai Properties and billionaire Li Ka-shing's Cheung Kong (Holdings) Ltd.

The new skyscraper, which offers office and retail space, will be topped by a 14-storey luxury hotel, the Park Hyatt Shanghai, and crowned by the world's highest observation deck.

Mori said he was confident of meeting the 90-per-cent occupancy target based on the amount of interest expressed so far and the still-limited supply of office space in Shanghai.

"Shanghai has just started transforming into a global financial centre, and I don't think there's any possibility of shrinking demand for office space. New development is necessary," he said. "Maybe in 10 to 15 years, Shanghai will need two to three more Lujiazui zones."

He acknowledged, however, that the situation had changed significantly from a year ago, when Mori was in talks with Morgan Stanley and Lehman Brothers about leasing office space.

"Morgan Stanley is doing fairly well, but it may reduce the number of floors it rents from eight to four," he said, adding that the talks with Lehman Brothers had ended.

Morgan Stanley had nevertheless wanted to increase its stake in the building, he said, but Mori refused and has no plans to reduce its holding in the project.

The Mori group hopes to sell some of its properties to investment funds, he added, while ruling out the possibility of an initial public offering, arguing that pressure from shareholders would make it difficult to start projects as ambitious as the Shanghai World Financial Centre.   - 2008 August 29   REUTERS

SHANGHAI -- Mori Building Co. said Thursday it has secured initial tenants for its 101-floor Shanghai tower and will sell a 10% stake in the $1 billion project to investment bank Morgan Stanley.

With a boxy hole at its top, the Shanghai World Financial Center will boast the world's highest observation deck, plus hotels and offices -- and will briefly stand as the world's tallest building before construction of a residential tower in Dubai is completed. - 2007 September   WALL ST JOURNAL

China Real Estate: The Japanese Touch
Japan's Mori is bringing its mixed-use style to the mainland with the development of Shanghai's World Financial Center

Clean, green and glassy, the Roppongi Hills building epitomizes a new Tokyo style so much that Hollywood regularly uses it as a backdrop - most effectively in Lost in Translation. In the Bill Murray film, as in reality, executives and filmmakers lounge in the lobby of the five-star Hyatt while chic Japanese shop for cosmetics and couture below floors of well-appointed offices, all in an architecturally pleasing building.

The setting sounds like a snug fit for Shanghai, where surging economic growth is lifting demand and rents for grade-A office space.

After successfully replicating the Hills mixed-use model around Japan, Mori Building Group, Japan's largest privately-owned developer, is bringing it to Shanghai, China's most glamorous city.

The World Financial Center (WFC) in Shanghai's Pudong financial district was designed by New York firm Kohn Pedersen Fox and built by a joint venture between China Construction and Engineering and Shanghai Construction Group. At 101 stories, or half a kilometer, tall, it will be the mainland's tallest building when it opens in 2008.

RETURN TO THE FRAY
Japanese developers have been quiet in China since Mori opened the Senmao Tower (now the HSBC Tower) in Shanghai in 1998, particularly compared to their Hong Kong counterparts.

But there's been a new surge of design-driven Japanese properties recently.

Rockefeller, a real estate subsidiary of conglomerate Mitsubishi, is working on a 94,000 square-meter mixed-use complex of apartments, shops and a boutique hotel in Shanghai's new Waitanyuan area, just north of the Bund. Completion is scheduled for 2009 though reports of forced evictions of locals have sullied the project's image.

Mitsui, Japan's largest developer, opened the Xi'an Garden Hotel in Xi'an, which is small beans next to its 461 Fifth Avenue Building in New York.

Lately the company has been exploring opportunities in the high-end Chinese residential market, a spokesperson said. The company will use its know-how in Japan's design-conscious residential market to "create new business opportunities".

China is hungry for Japanese standards of style and hospitality, says Frank Zhu, head of marketing at the Japanese-run Okura Garden Hotel Shanghai.

Managed by high-end Japanese hotel brand Okura Hotels and Resorts, the hotel's fusion of "Japanese sensibility, tradition, and culture with modern functionality" has succeeded in Shanghai, Zhu said, because it provides exacting Japanese-style service and a range of dining options.

Mori will use Japan's reputation in high-design and top service to exploit Shanghai's booming economy. Shanghai's GDP grew by 9% in 2006 while average grade-A office rents reached US$0.99 per square meters per day, according to property consultancy Jones Lang LaSalle. In Pudong, grade-A office rents increased 23.2% to reach US$1.06 per square meter per day.

Meanwhile, office vacancy rates were low, at 2.63%. Lack of new office supply in 2007 will continue to drive rents up, says Kenny Ho, head of research at Jones Lang LaSalle in Shanghai.

The WFC is Mori's third venture in China. In addition to Shanghai's Senmao Tower, it opened a Dalian building in 1996 - but both are far less ambitious. The WFC will have a six-star Hyatt hotel and the world's highest observation platform. Its 62 floors of office space will be at the top end of the market. Twelve to 16 floors already have prospective tenants, says Robert Hindman, the WFC's head of marketing.

Hindman won't diclose rents, only saying that they will be competitive.

"Look to local grade-A buildings and you'll have a good idea of what we'll charge," he said. "It's not like Hong Kong where rents are astronomical."

Leases will be signed in the next few months but several banks have already agreed to rent space. Most tenants will be foreign multinationals, although local companies are also expected.

"One and a half years ago, tenants would have been all [foreign] multinationals. But we will have some Chinese tenants," Hindman added.

The WFC's foundation stone was laid on August 1997, but the Asian financial crisis halted construction. The US$850 million project was rescued after a consortium of 36 international and Japanese investors was formed. Design changes and post-September 11 safety features added US$200 million to the bill since construction resumed in early 2003.

When it is finished in 2008, it will be the first of Mori's mixed-use projects outside Japan since it started a series of Hills-branded buildings in major Japanese cities in 1986.

HAUNTED BY HISTORY
Japan's difficult history with its giant neighbor has haunted the WFC. What caused the most fuss was a circular hole at the top of the building that was supposed to represent "heaven" and serve as a way to reduce wind load on the building. But China linked it to Japan's imperial symbol of a rising sun. In mid-October 2005, Mori caved, and "heaven" was changed to a rectangular opening.

Even the building's name has been contentious. Mori informally called the development Shanghai Hills, but city planners prefer the grander sounding World Financial Center. In December, Mori announced the building would be known as Shanghai Hills World Financial Center.

Given historical Sino-Japanese grievances, it's understandable that Mori shies away from the J-word. "It really is a global project," said Hindman, an American.

For all the talk of Japanese aesthetics, architecture has not turned out to be the WFC's main selling point. According to Hindman, companies prioritize back-up power and staff comforts.

"When competition for staff and retention are crucial, affordable lunches are important," he said.

The building will have nine generators to keep the lights on in the event of a power outage, a backup system said to be equaled by only one other construction in the city.

Mori will also implement Japanese property management standards in the WFC, brining in 40, mainly Japanese, managers, from its headquarters.

Mori's new brand of Japanese real estate seems like an irresistible match for Shanghai's global aspirations, despite the redesigns and ruffled feathers. As Hindman puts it: "We are going an extra step in mixed-use. What we're building is a city within a city." -    BUSINESS WEEK     10 April 2007

CenturyBoulevard,  Pudong New Area Shanghai SH China

When work began on the Shanghai World Financial Center in 1997, in the headiest days of this country's economic takeoff, Shanghai was already a city that was hard to impress.

Even then, the erstwhile farmlands of Pudong District boasted two icons: the Oriental Pearl Tower, looking like a science fiction movie prop with its rocket-on-the-launching pad trunk and glittering, space-station-like orbs; and the nearby Jin Mao tower, a bejeweled spire of stacked pagodas that boasted the world's highest hotel lobby.

With competition like that, the man behind the project, the most famous Japanese real estate developer, Minoru Mori, knew he had to aim high to make his mark. And by the time of the groundbreaking it seemed as though his team had struck on the right plan.

Mori, who has a Trump-like three dozen or so buildings in Tokyo that bear his name, would offer Shanghai the world's tallest building, at 1,614 feet, or 492 meters. For extra effect, the roof of his new building would be formed by a giant enclosed circle that would house specially outfitted cars, a sort of Ferris wheel at the top of the world.

If skyscrapers can be said to have journeys, what has happened since, though, has been one long strange trip indeed. These days workers are racing to complete the 101-floor building on schedule, mounting skyward floor by floor toward a hitherto unaccustomed view that looks down on the neighboring landmarks.

But in truth, neither the schedule nor the building itself bears much resemblance to the original plans, which for many people involved may by now almost seem like a lifetime ago.

Record-breaking skyscrapers have a long and uncanny history of association with economic crisis - the Empire State Building and Rockefeller Center, for example, were both conceived in the 1920s and completed in the early years of the Great Depression - and Mori's gaudy Shanghai dream would be no exception. Within months of the groundbreaking, a financial crash struck Asia, ripping the bottom out of stock markets and real estate markets alike throughout this region.

Work was halted on the Finance Center, partly out of fears of a shortage of tenants and partly out of doubts over the unspoken premise that lay behind the project: that the Chinese economy was set to lead the world. For five long years, the huge work site sat idle, with nothing reaching skyward save for overgrown grass behind a plain cement wall.

A holding pattern like this would have been enough to sink many developers, but not Mori, for whom completing the project appears to be a point of pride.

"We are not a listed company, so we are able to control our costs very carefully," said Michiho Kishi, a spokesman for the company. "If we had been a listed company, our CEO would have been forced to resign, very simply. That's what makes us unique."

What Mori was unable to control was what would happen while his project was frozen. Five years, it turns out, is an eternity in the record-breaking skyscraper business, especially with countries all over Asia throwing their hats into the ring with new superstructures, each taller than the last.

For Shanghai's would-be title holder, the delay resulted in the building being surpassed even before it could be built, with the additional indignity that the new champion, Taipei 101, a 1,671-foot structure, was located in the capital of the diplomatic rival that China considers a renegade province, Taiwan.

But that was not the only setback. With anti-Japanese sentiment swelling in China, questions began to be asked about the Shanghai building's design.

Some said the large hole at the building's summit was suspiciously reminiscent of the sun that sits at the center of the Japanese flag, a sore point for many Chinese, who still harbor resentments over Japan's violent invasion of the country in the 1930s.

Mori's representatives gamely protested that the circle with the sky ride was based on a traditional Chinese symbol, the moon gate, but in the end they quietly backed down, replacing the hole with a squarish slot and ditching the Ferris wheel concept altogether.

But that still left them with the delicate problem that Taipei would have a taller building. Actually, not a problem at all, as visitors to the site soon discover. There, they are treated to an extravagant multimedia presentation, complete with mock-ups of the world's tallest buildings.

The Shanghai building is shown standing shoulder to shoulder with its Taiwan rival, barely but perceptibly taller, save for the other building's long antenna. In case this point is lost, amid a flood of statistics about the building's 91 elevators, or the special weights built into the 90th floor to counteract wind sway or the 10,000 office people who will eventually work here, Kishi told a visitor: "Actually if you are counting rooftop height, we are the taller building, but we are not after competition."

All the one-upmanship will soon be rendered moot, however, by a far heavier hitter that is about to enter the stage: a 2,300-foot structure built in Dubai by relatives of Osama bin Laden that looks likely to hold off the competition for a good while.

On the ground, among the thousands of workers who have labored on the project, the outcome of this contest seems to matter little, though.

Amid a lunchtime scrum around sidewalk noodle vendors, Liu Xue, a pipe fitter, spoke proudly of the project. "It's a symbol of the speed of China's development," he said waving his hands animatedly as he spoke.

"It's for office workers, not people like us, and I may never come here again once it's finished. But I'll always be able to point to it, and tell my children about it."

While diplomatic, the explanation strains credulity, especially for anyone who knows the history. The Shanghai building was originally designed to have 94 floors, rising to roughly 1,509 feet, but has quietly grown since then, with more floors added, as well as more height to each floor, resulting in about 105 extra feet.

All the one-upmanship will soon be rendered moot, however, by a far heavier hitter that is about to enter the stage: a 2,300-foot structure built in Dubai by relatives of Osama bin Laden that looks likely to hold off the competition for a good while.

On the ground, among the thousands of workers who have labored on the project, the outcome of this contest seems to matter little, though.

Amid a lunchtime scrum around sidewalk noodle vendors, Liu Xue, a pipe fitter, spoke proudly of the project. "It's a symbol of the speed of China's development," he said waving his hands animatedly as he spoke.

"It's for office workers, not people like us, and I may never come here again once it's finished. But I'll always be able to point to it, and tell my children about it." -  7 May 2007

World's tallest building

• The original blueprint for the Shanghai World Financial Centre called for a height of 460m, topping the current record holder - Malaysia's 452m Petronas Twin Towers.
• Tokyo-based Mori Building Co has changed the planned height but both the company and the Shanghai government have refused to disclose the new goal until an official ribbon-cutting ceremony next Thursday. However, Mori insists that its project ''will be the tallest building in the world''.
• To achieve this, the Shanghai building must be taller than the 508m height of the Taipei Financial Centre being built in Taiwan.
• Shanghai will also be competing with New York City, which is considering two plans to replace the World Trade Center with a building which is either 507m or 541m tall.

Mori signs tenants for Shanghai tower

Mori Building Co, Japan's biggest private developer, signed its first tenants for China's tallest skyscraper and is asking rents 40 per cent higher than Shanghai's priciest, underlining demand for offices in the nation's financial centre.

China's tallest skyscraper: The 492 m Shanghai World Financial Centre will be completed next year

Subsidiaries of Mizuho Financial Group Inc and Sumitomo Mitsui Financial Group Inc will lease space at the 492 m Shanghai World Financial Centre, Tokyo-based Mori said yesterday in a statement. The building will be the world's second-tallest office block when Mori completes the tower next year, after Taipei 101 in Taiwan.

'This is a huge building,' said Remy Chan, regional director of Asia- Pacific at Jones Lang LaSalle Inc, the world's second-largest commercial real estate broker. 'It will be a market maker. Their rental policy will impact the market.' Financial companies are expanding in Shanghai after stocks tripled this year and the government relaxed rules on foreign banks, driving down the city's office vacancy rate. Mori started marketing the building before an estimated three million sq m of space comes onto the market by the end of 2010, doubling Shanghai's office supply.

Mori's skyscraper adds 226,900 sq m, about half as much new space as Shanghai usually needs in an entire year, Mr Chan said.

The new centre will push the vacancy rate up to 5 per cent for the city's Pudong region at the end of 2008 from 1.9 per cent in June, and may stall rent increases in the area, he said.

Mori is asking as much as 640 yuan (S$129) per sq m per month on a net area basis for the building, equivalent to US$1.99 per sq m per day on a gross area basis, Chan said.

The average office vacancy rate in Shanghai fell to 2.6 per cent as at June, from 4.9 per cent in March, according to Jones Lang LaSalle. Rents have gained 14 per cent to 8.2 yuan a sq m as at June 30, compared with a year earlier.

Construction of the tower was halted in 1997 because of the Asian financial crisis. In 2005, political tension over Japan's occupation of China in World War II led to the removal of a circular hole from designs of the building's apex, on concern it resembled the Japanese flag.

The glass and reinforced concrete skyscraper, which includes a shopping mall and a 180-room Park Hyatt hotel, will overshadow the 88-story Jin Mao Tower that stands on an adjoining plot. Its observatory will be the world's highest at 472 m above ground, Mori said. -- Bloomberg   2007 September 14

Shanghai real estate set for rise in foreign funds

Shanghai's real estate market has attracted a great deal of interest from institutional investors over the past two years, with investment banks like Morgan Stanley, AIG Group, Lehman Brothers and Macquarie Bank all actively pursuing deals. The two key areas of interest are luxury residential projects and projects that show a stable, long-term investment yield.

Since 2002, the Shanghai government has tried to control land supply with a number of regulatory changes in areas such as plot ratios, public-land tenders and land reserve policy. The new legislation has shown results - the number of public-land tenders last year dropped to 484 from 1,538 in 2003, of which residential land represented over 60 per cent. The main areas of land supply have been the districts of Minhang, Baoshan and Songjiang.

Because of these controls, supply in the downtown area and in the luxury villa sector dropped dramatically last year. The size of approved pre-sale residential areas in 2004 stood at 29.39 million sq m, down 13.2 per cent from 2003's 33 million sq m.

Influenced by the government's macro controls, average residential prices rose at a modest rate of around 1.35 per cent per month in the first half of 2004, rising to 3.6 per cent per month in the second half as the real estate sector appeared to shrug off the measures. The average residential transacted price had risen to 8,311 yuan (S$1,660) per sq metre (psm) by the fourth quarter of 2004, representing a quarter-on-quarter increase of 6.4 per cent, and a year-on-year increase of 6.3 per cent.

Savills Research defines the middle to high-end residential market as units valued more than 10,000 yuan psm. This accounts for less than 5 per cent of the overall market. More than 15 per cent of these residential units were sold to overseas buyers (including buyers from Hong Kong, Taiwan and Macau), and more than a quarter were taken by buyers from other provinces last year.

Projects in the downtown and luxury villa areas that are built to a high standard and are professionally managed attract foreign investors due to their limited supply. Expatriates, wealthy locals and buyers from other provinces are all generating strong demand for luxury residential units and prices are expected to continue rising.

In Jin Lin Tian Di, a luxury apartment project next to the Xintiandi recreational area by Centrepoint Properties with sale prices of about US$2,800 psm, more than 40 per cent of buyers were foreigners. In phase two of the Shanghai Racquet Club & Apartments in Minhang District, next to the Shanghai American School, over half the buyers were from overseas.

Most funds and investors are interested in acquiring properties that show a long-term return, such as some luxury villas and service apartments that offer a stable rental income. Examples include Shanghai Racquet Club and Central Residence in Jing'an district.

A buoyant market last year saw an increase in both rents and occupancy rates in the residential leasing market thanks to a favourable investment environment and significant foreign direct investment (FDI). The increase in FDI has brought an ever-growing number of expatriates seeking luxury accommodation. Overseas professionals with relatively high housing allowances and business travellers continue to drive rents up.

The luxury apartment market was relatively quiet in the last quarter of 2004 with average rents stable at US$24.60 psm per month and an occupancy rate of 91 per cent. However, the high occupancy rate recorded during that period and sustained expatriate demand are expected to push rents up from early 2005.

Meanwhile, despite rising levels of investment since 2001, the proportion of funds for the residential sector has been gradually declining, while retail property has been showing an upward trend lately.

A number of foreign funds are also interested in buying completed commercial properties that also provide a stable rental income. Currently, most of the quality commercial projects in prime central business district (CBD) areas are retained for lease only, and only a few are available for en-bloc sale.

Morgan Stanley recently took up equity in World Trade Tower, an office building close to the Bund in Huangpu district, while Macquarie Global Property Advisors (MGPA) acquired XinMao Plaza, another office project developed by CapitaLand Group in Xintiandi, for 800 million yuan. Most commercial properties for strata title sale are located in secondary areas, or close to prime CBD areas.

The bottom line is that more foreign funds are expected to enter Shanghai this year with recent fiscal tightening forcing more projects to seek outside financing, giving overseas capital plenty of new investment opportunities. - by Kitty Tan   SINGAPORE BUSINESS TIMES       29 March 2005