Real estate stays flat, but offices favored

China's real estate investment market remained flat in the first quarter of 2022.

Offices stayed the most favored assets, global property adviser JLL said in its latest report on Tuesday.

Between January and March, commercial real estate investment was US$8.3 billion across the country, little changed from same period a year earlier, JLL's Capital Tracker Q1 2022 showed.

Offices worth US$3.9 billion were sold during the period, accounting for 47 percent of the total.

The industrial and logistics sector took 21 percent.

Real estate investment in the Asia Pacific region jumped 20 percent year on year to US$40.8 billion during the first three months, driven by Singapore, South Korea and Australia.

"Concerns about slowing economic growth in China will affect investors' judgment on asset values and investment returns at the moment while looking ahead, the recovery of investment volumes will depend mainly on the pace and extent of loosening anti-COVID measures in Beijing and Shanghai," said Eric Pang, head of capital markets, JLL China.

"Whether factors including the recent interest rate hikes by US Fed and high inflation in many countries will affect international capital investment into China's real estate market still remains to be seen."

China's policymakers continued active management of the property market by lowering the LPR (loan prime rate) by 20 basis points, adjusting thresholds for homebuyers in selected cities, as well as postponing a proposed property tax, although banks are still reluctant to fund developers despite signals from the central government.

As a consequence of strict pandemic control measures which have been imposed in Shanghai and several other cities amid a resurgence of COVID-19 cases, investors are re-evaluating their investment plans, JLL said.

There are, however, positive signs with continued interest in the multi-family sector, which remained relatively unaffected by the control measures, and which will directly benefit from the announcement that the next round of real estate investment trusts that will include affordable housing.