Do­mes­tic buy­ers seen as key driver

China Daily (Hong Kong) - - BUSINESS - By WU YIYAO in Shang­hai wuyiyao@chi­nadaily.com.cn

In real es­tate across the coun­try, do­mes­tic buy­ers are ex­pected to dom­i­nate big or block in­vest­ment deals worth 100 mil­lion yuan ($14.5 mil­lion) or more each in the New Year, an in­dus­try re­port said.

That’s be­cause buyer in­ter­est in of­fice build­ings, ser­viced apart­ments and com­mer­cial com­plexes is ris­ing, said a re­search re­port by DTZ/Cush­man & Wake­field, a realty ser­vices provider.

The re­port said the realty in­vest­ment mar­ket in China has been “par­tic­u­larly ac­tive” in 2016 and may con­tinue to thrive in 2017.

Na­tion­wide, block deals were worth some 200 bil­lion yuan this year.

In Shang­hai alone, block deals ex­ceeded 130 bil­lion yuan, more than dou­ble that in 2015, ac­cord­ing to DTZ.

In terms of trans­ac­tion value in Shang­hai, of­fice build­ing deals ac­counted for more than 75 per­cent of all deals. In terms of trans­acted space, they ac­counted for more than 70 per­cent.

“An ob­vi­ous trend is that do­mes­tic buy­ers are dom­i­nat­ing the mar­ket, and the av­er­age trans­ac­tion value of deals is ris­ing. Do­mes­tic buy­ers are fa­vor­ing premier of­fice build­ings that bring sta­ble and steady in­come. In­vestors are look­ing for qual­ity as­sets, and real es­tate mar­ket pro­vides good op­por­tu­ni­ties,” said Jim Yip, man­ag­ing di­rec­tor of In­vest­ment and Ad­vi­sory Ser­vices, China, DTZ/Cush­man & Wake­field.

As the res­i­den­tial prop­erty poli­cies have been tight­ened ear­lier this month, in­vestors are look­ing at com­mer­cial realty. The eas­ier in­ter­est rate en­vi­ron­ment has also en­cour­aged buy­ers to look at big­ger deals, said an­a­lysts.

bil­lion yuan

In­surer-linked funds, which have been widely re­ported to have ac­quired over­seas as­sets in pre­vi­ous years, are also al­lo­cat­ing huge amounts to do­mes­tic as­sets like of­fice build­ings, com­mer­cial com- plexes and shop­ping malls.

Post trans­ac­tions, build­ings are re­fur­bished or trans­formed for other pur­poses as per trends. For ex­am­ple, old ho­tels in cen­tral lo­ca­tions are turned into of­fice build­ings, the DTZ re­port said.

Of­fice build­ings in Wuhan, Shen­zhen and Chengdu are in great de­mand as they play a key role in driv­ing re­gional growth, the re­port said.

Ser­viced apart­ments are also ex­pected to be­come a key real es­tate cat­e­gory and an in­vestor tar­get in the next few years, par­tic­u­larly in first- and sec­ond-tier ci­ties, given the rise in trans­ac­tion value there.

For in­stance, Shang­hai’s ser­viced apart­ments gen­er­ated 7.15 bil­lion yuan in 2016 sales, up from 4.2 bil­lion yuan in 2015.

the value of block deals na­tion­wide this year

YANG YI / FOR CHINA DAILY

A po­ten­tial buyer seeks in­for­ma­tion about prop­erty projects at a real es­tate expo in Shang­hai.

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