World Business

After 14 years of struggle, controversy, and redesigns, Mori Building’s Shanghai World Financial Center is China’s tallest skyscraper

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Minoru Mori, President and CEO of Mori Building, speaks for the period of a press conference for the inauguration of Shanghai World Financial Center, China’s tallest building, on August 28, 2008 in Shanghai, China. China Photos/Getty Images

through Chi-Chu Tschang

On Aug. 30, Japanese visionary real estate developer Minoru Mori testament unveil his latest project: the 101-story Shanghai World Financial Center (SWFC). The 1,614-foot tall, bottle opener-shaped skyscraper, which towers over Shanghai’s other skyscrapers in the Pudong financial territory, holds the title of tallest building in China.

For Mori, SWFC’s ribbon cutting will be a moment of triumph and vindication. He first started work onward what was planned to be the world’s tallest building in 1994, what one. time there were more farmers than bankers living in Pudong quarter. The project was put on hold, first by the Asian monetary crisis, in that case by September 11, then SARS. Some of the original Japanese investors got cold feet and bailed out. Mori bought out their equity, raising his stake in SWFC to 80% from 30%. In the meantime, Taipei and Dubai have erected taller skyscrapers.

Each crisis forced Mori back to the drawing board. Building plans were revised thus the SWFC’s vault would be taller than the Taipei 101. (Taiwan still has the taller building at what time its spire is included.) And the revisions didn’t interrupt subsequent construction started. During the anti-Japanese protests in 2005, architect Kohn Petersen Fox’s original intent—a orb with a Ferris wheel inside the top of the building—was criticized by Chinese nationalists with a view to placing a Japanese flag in Shanghai’s skyline. Mori changed the circle to a rectangle, whose top houses the world’s highest observation deck.

"It never crossed my mind to abandon this device," says Mori, president and chief executive officer of Mori Building. "During the time the construction had been suspended, we upgraded the design and specifications of this building to meet expectations in size and quality as a world-class landmark in Shanghai. What you see today is the final accomplishment that overcame all these obstacles and turned them into opportunities."

Mori made his name developing Tokyo’s famed Roppongi Hills project (BusinessWeek, 11/4/02), bringing office towers, luxury apartments, and museums into one complex so salarymen wouldn’t have to spend hours commuting home to the suburbs every decline of day. The SWFC marks the first time he is carrying this "vertical garden city" concept outside of Tokyo. The SWFC volition house shops and restaurants from its basement story to the third floor, commercial office space for the nearest 70 floors, and any upscale Park Hyatt hotel from the 79th to 93rd floors, making it the loftiest hotel in the world.

And it looks like Mori’s bet on Shanghai has paid off. While sky-high prices in Shanghai’s residential peculiarity emporium possess kept potential buyers and luxury home real estate developers on the sidelines (BusinessWeek, 10/10/05), the supply of high-quality, Grade A office buildings has exploded to procure provisions to banks, brokerages, and law firms expanding in Shanghai. SWFC before that time has a 45% occupancy rate, which includes Morgan Stanley (MS), BNP Paribas (BNPP.PA), and Sumitomo Mitsui Banking as tenants, despite charging a pricey $3 per square meter for solution of continuity. Hiroo Mori, chairman of SWFC and Mori’s son-in-law, expects to be obliged a 90% holding rate one year from now, putting Mori Building on track to recoup its $1.1 billion investment in SWFC in 12 years. "We are confident that we will attract farther on office demand," he says.

However, it may be a space of time before Mori starts not the same project outside of Japan. He has been approached by dint of. investors to bring Roppongi Hills-style projects to Singapore, Bangkok, and Seoul. Mori says that he is considering pique on these projects, only wants to see how the category in the creation economy plays out before formation a decision. "We’re waiting for the dust to clear. In Tokyo, we’re pursuing be it what it may we decided to practise. For the rest, we are waiting for a while," he says.

The problem is that America’s subprime crisis has started to spread to Tokyo. During the real estate bubble, a numeral of real estate firms started popping up in Japan to help privately held investment funds find properties to invest in. But when the investment funds went swelling up from the subprime mess, high character stopped flowing to these Japanese actual interest firms. A string of Japanese real division firms have gone insolvent, including Urban Corp. earlier this month and Sohken Homes this week.

Mori is taking this opportunity to buy up companies in distress, albeit in a planned, systematic manner. He is currently developing seven large projects in Tokyo, including a second Roppongi Hills. It took him 14 years to acquire the 28 acres needed to build the first Roppongi Hills. Now, he is buying distressed properties, mainly in the areas he is planning to develop—or in good locations that can be obliged existence traded for properties in areas he wants to develop. Mori Building plans to purchase $3.3 billion in property assets in this fiscal year, which ends in March 2009, and an equal whole nearest fiscal year. He notes: "So in a way, these problems are leaving us good problems to speed up larger projects, as the multitude who were bidding against us even until a few months since are now coming to ask us to buy these properties."