UPDATE 2-M.Stanley to sell China property to Keppel unit

* M.Stanley arm in talks to sell Shanghai apartment complex

* In final talks with Singapore’s Alpha, unit of Keppel
Land

* Property valued at about $230 mln
(Adds details)

By Lee Chyen Yee and Samuel Shen

HONG KONG/SHANGHAI, Feb 2 (BestGrowthStock) – The property
investment arm of Morgan Stanley (MS.N: ) (Read more about the money market today. ) is in final talks to
sell a Chinese apartment complex to a unit of Singapore’s
Keppel Land (KLAN.SI: ), sources close to the deal said on
Tuesday.

The deal comes as some foreign investors are keen to tap
the booming Chinese property market, which has seen residential
prices rise as much as a third last year in first-tier cities
such as Beijing and Shanghai.

“In the long term, this is a pretty good investment for any
foreign investor,” said Clement Luk, CEO of Eastern and
Northeast China at Centaline Properties. “But in the short
term, rental yields will be quite low because residential
prices in Shanghai have risen far too quickly.”

The overall value of the luxury apartment property is
estimated at about 900 million yuan ($130 million) and Morgan
Stanley has owned it for about five years, the sources and
local media said.

However, they would not disclose the total value of the
sale of the complex, which is controlled by Morgan Stanley and
partly owned by a local partner.

The sources declined to be identified because they were not
authorised to talk to the media.

Alpha Investment Partners, a unit of Singapore’s
third-ranked developer Keppel Land, was in exclusive
negotiations with Morgan Stanley Real Estate Asia to purchase
the Jinlin Tiandi complex in downtown Shanghai, they said.

Local media said the complex included apartments with a
total floor space of around 19,000 square metres, a 1,300-sq m
clubhouse and a parking lot.

One of the sources said Alpha was the only bidder left
after several rounds of negotiations and that the deal was
expected to close within the next couple of months.

Executives at Alpha and Morgan Stanley declined comment.

If the deal is closed, it could be Alpha’s first investment
in mainland China, the sources said.

Some foreign investors have been active in China, though
they are now watching closely as the Chinese government moves
to rein in runaway prices for fears of a bubble forming.

China has been trying to curb sharp rises in property
prices, deploying a combination of credit tightening measures,
increasing supply of affordable housing and verbal persuasion.
[ID:nTOE60D02G]

Property prices in 70 major cities rose 7.8 percent in
December from a year earlier, logging the fastest pace last
year. [ID:nTOE60D02M]

“We still believe the Chinese government has no intention
of applying broad tightening measures, but rather is likely to
focus on reigning in investor demand and keeping residential
price increases steady,” Macquarie said in a report last week.

Stocks

($ = 6.8 yuan)
(Additional reporting by George Chen in HONG KONG, Editing by
Ian Geoghegan)

UPDATE 2-M.Stanley to sell China property to Keppel unit