Vibrant real estate M&As seen in H1

The value and volume of real estate merger and acquisition activities continued to be vibrant in China in the first half of the year, with the industry becoming more intensified, a report released yesterday by PwC showed.

From January to June, the total value for domestic real estate M&A deals jumped 78.5 percent year on year to US$44.6 billion whilst the total number of M&A deals rose 24.7 percent to 207, according to PwC, which tracks equity transfer deals within the real estate industry across the country.

“M&A consolidation has become a notable way for real estate companies to expand and a key method to increase their land reserves quickly,” said Franklin Zhai, PwC China deals real estate partner. 

“Looking ahead, as market competition further intensifies, real estate enterprises will be more concerned about their scale in order to maintain their leadership which will result in increased industry concentration.”

Industry concentration intensified in the first six months. By sales value, the country’s top-20 developers contributed 35.6 percent of the industry total in the first half, up from 25.2 percent in 2016. The concentration of the top-100 companies hit 58.1 percent during the same period, up from 44.8 percent last year, PwC data showed.

During the six months, M&A transactions in east, central, south and north China took up more than 85 percent of the total value and above 80 percent of the total volume, PwC said. 

Shanghai, Beijing and Shenzhen took a combined 40 percent share in value and 35 percent in volume.