Strong momentum continues in Shanghai real estate investments

Interest in en-bloc real estate investment was robust in Shanghai in the third quarter of this year, and that strong momentum will probably extend over the coming few quarters, global real estate services provider JLL said in its latest research.

Between July and September, total investment volume for major property deals reached 32.1 billion yuan (US$4.63 billion) across the city, a quarter-over-quarter surge of 90 percent and a year-over-year increase of 69 percent.

By asset types, office buildings continued to be the most sought-after properties among investors, taking 29.8 billion yuan and accounting for 88 percent of the total. That was followed by the retail sector which saw 2.1 billion yuan worth of deals concluded during the three-month period.

"With several notable deals currently in progress, we expect transaction volumes to maintain their momentum over the next two to three quarters in Shanghai, which remains China's top investment destination," Daniel Yao, head of research for JLL East China said. "In particular, we've witnessed strong interest in office projects in decentralized areas where leasing momentum proved to be strong."

The capital investment market is also shifting from a seller's market to a buyer's one as the domestic financing environment continues to tighten. Notably, foreign investors have become more active as they stepped up to capture investment opportunities and increase their capital allocations to China.

Nationwide, major real estate investment deals jumped 25 percent year on year to 53.6 billion yuan in the third quarter of 2018, with Shanghai contributing 60 percent of the total, according to JLL research.