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Artist’s impression of the new site next to CapitaLand's Innov Center. CapitaLand

CapitaLand on Tuesday said its unit CapitaLand China entered into a deal to acquire a commercial site in Wujiaochang decentralised business district, Shanghai, for 838 million yuan (about S$171 million).

The acquisition will boost CapitaLand's presence in Wujiaochang, one of Shanghai's most vibrant decentralised business districts where it already owns Innov Center, an operational office with ancillary retail that was acquired earlier this year, the company said in a regulatory filing.

CapitaLand plans to develop the site into a Grade A office, with a total investment of about 1.3 billion yuan (about S$265 million). It will be the only new Grade A office supply in Wujiaochang in 2020 when it is completed.

Construction for the new office will begin early next year, CapitaLand said.

"With Shanghai set to overtake Hong Kong as Greater China's largest office market by 2020, we are optimistic about the growth prospects in this sector," r Lim Ming Yan, President and Group CEO of CapitaLand said in a statement.

The growth prospects of Wujiaochang have already attracted a number of multinational companies, including Continental AG, Deloitte, Henkel and Nike.

Including the new office, CapitaLand owns/manages 19 commercial properties in Shanghai, which include Raffles City Shanghai, Capital Square, Capital Tower Shanghai, Hongkou Plaza, among others.