Shanghai real estate sector looking rosy

Shanghai's real estate investment and development prospects in the Asia Pacific region for next year continue to be rosy, despite high prices and severe competition to secure assets, a joint report released on Thursday by the Urban Land Institute and PricewaterhouseCoopers showed.

The city was ranked sixth for investment opportunities and fifth for development prospects in 2019, slightly down from this year's fourth spot in both categories. The report was based on personal interviews with 89 professional individuals and over 370 survey responses, mainly from developers, real estate consultancies, fund and investment managers, and institutional equity investors.

"Shanghai, the most liquid market on the Chinese mainland, remains the first port of call for foreign investors seeking core assets as a means of diversifying their global portfolios," Sally Sun, a PwC China assurance partner said. "Given high prices in central city locations, opportunistic foreign investors continue to look at possibilities in decentralized areas."

Value-adding, meanwhile, is also becoming an increasingly popular theme in Shanghai as owners are looking to upgrade assets by providing more flexibility, better user experience and improvements leveraging design and technology functions, the report said.

Apart from plenty of foreign funds with a mandate to invest in China to diversify their global real estate holdings, huge amounts of domestic liquidity will also backstop with cash-affluent insurance companies in particular, remaining active buyers for years to come.

Regionally, Melbourne narrowly outstripped Sydney to become the top city in terms of both investment and development prospects, partly boosted by its constrained office supply pipeline, the report said.

Other major trends noted in the report included logistics facilities remaining a go-to investment, and continuously strong capital flows in cross-border real estate investment.