How do Shanghai and Beijing defy China’s property slowdown?
- Foreign investors’ share in Shanghai and Beijing’s commercial property transactions has risen to 61pc and 30pc respectively so far this year
- Property consultants forecast that these investors’ interest will sustain in 2019 as long as China’s credit tightening continues
Overseas investors’ surging investment in commercial properties in China’s top cities has helped Shanghai and Beijing defy the credit tightening and market slump to sustain their high transaction volumes this year, a trend that is expected to extend into 2019, according to property consultants.
Their share of Shanghai’s total 105 billion yuan (US$15.2 billion) in commercial property deals this year through December 10 had leapt to 61 per cent, up from 24 per cent in 2017, said Cushman & Wakefield. The city closed deals worth a total of 120 billion yuan in 2017.
In Beijing, offshore investors took a 30 per cent share of the total transactions, up from a meagre 2.2 per cent last year, raising this year’s volume by nearly 36 per cent on the year to 56 billion yuan, a record level for the city.
Both cities, traditionally favoured by foreign players, account for about half of these investors’ total commercial property investments in China.
“The 61 per cent (share from overseas investors) is critically important as it holds up Shanghai’s 2018 investment market despite the tight credit conditions and the downturn of the broader property market,” said Eric Lu, executive director of capital markets at Cushman & Wakefield.
“We see this as part of global investors’ overall pivot to strengthen their asset allocation in China, not only in real estate but other financial assets such as stocks. They have raised huge volume of money through China and Asia-focused funds and the quotas are far from being used up. Therefore, we’d see continual interest from overseas investors in 2019,” Lu said.
