Real estate investment in Shanghai surges in 2021

En bloc real estate investment deals in Shanghai surpassed the 100-billion-yuan (US$15.69 billion) barrier for the first time in three years with domestic buyers remaining the dominant players, a major international property consultant said in its latest report.

Citywide, major property deals worth 105.1 billion yuan in total were concluded this year, an increase of 46 percent from 2020, according to Cushman & Wakefield's data released on Tuesday.

"Shanghai remains the most popular city on the Chinese mainland among real estate investors in 2021, which witnessed a notable rebound in sentiment among both institutional buyers and end-users," said Alvin Yip, Cushman & Wakefield's China president of capital markets.

By property type, office buildings, which accounted for a 46 percent share, a significant decline from 80 percent in 2020, remain a favorite option among buyers. Mixed-use developments, retail space, and residential projects, meanwhile, have seen improved interest from property investors over the past 12 months, with their shares gaining between 5 and 12 percentage points compared with the prior-year period, according to Cushman & Wakefield data.

In terms of the origin of buyers, overseas investors accounted for 24 percent of the total transaction value, up from 16 percent in 2020.

Buyers with purely investment-related intentions outperformed end-users again in 2021, accounting for 63 percent of the total transaction value, up from the 47 percent share registered in 2020.

Noticeably, the majority of the end-use property buyers are from the TMT (technology, media, and telecommunications) and biopharmaceutical industries, with transaction value involving buyers from the TMT industry surging ninefold from 2020.

Looking forward, the company has predicted that more high-quality real estate projects will be available in the local market at discounted prices as credit policies continue to be tight while foreclosed assets, multi-family projects, office buildings for R&D purposes, as well as industrial and logistics projects suitable for REITs, among others, will be more popular among investors.