Investors going for offices

Cao Qian
China's en-bloc real estate investment market got off to a great start this year with more than US$7.67 billion of major property deals concluded in Q1.
Cao Qian

China's en-bloc real estate investment market was off to a great start in 2019 with an extremely robust appetite for office buildings, global property consultancy CBRE said in a report released today.

Nationwide, more than 53 billion yuan (US$7.67 billion) of major property deals were concluded between January and March, the highest Q1 figure since 2005.

The transaction value of offices accounted for 47 percent of the total, an increase of 21 percentage points from same period a year earlier. That translated to over 25 billion yuan, also the best Q1 performance since 2005.

"This was a clear demonstration of the long-term optimism held by investors toward China's resilient economic growth," said Sam Xie, head of research at CBRE China. "At the same time, it reflected investors' more balanced appetite for risks."

According to the latest investment sentiment survey conducted by CBRE, the Chinese mainland has replaced Australia and Japan for the first time in 2019 as the No. 1 destination for cross border commercial real estate investment in Asia Pacific, with Shanghai ranking top on investors' radar.

As for offices, the most sought-after property type among investors, CBRE suggests that attention should be paid mainly to those in core locations in first-tier cities particularly Guangzhou, some selected second-tier cities such as Nanjing and Hangzhou, as well as buildings in emerging areas and business parks in gateway cities primarily due to the ongoing trend of decentralization among corporate tenants for cost reduction purposes.

Logistics is another popular property type for major real estate investment deals. The Guangdong-Hong Kong-Macau Greater Bay Area, Shijiazhuang and Jinan in northern China and Xi'an, Guiyang and Changsha in central and western parts of the country, among others, may provide good opportunities for investors because of a shortage of new supply in those areas, according to CBRE.

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