New CBRE China chief ‘upbeat’ on prospects
CBRE, the world’s largest commercial real estate services firm, is celebrating twin anniversaries this year — its 40th year of doing business in Hong Kong and its 30th year on the Chinese mainland.
Late last month, the property consultancy firm appointed Alan Li as president of CBRE China.
Still in his early 40s, Li is an 18-year veteran of the real estate industry, with extensive experience in office leasing and major real estate investment deals valued at more than US$10 million each.
Li, who holds an MBA from Fudan University, joined CBRE China three years ago as its managing director of capital markets after working for 12 years at JLL, another global property services provider. So far this year, his CBRE Capital Markets team chalked up more than 50 major real estate investment deals in China, with transaction value totaling more than 40 billion yuan (US$5.8 billion).
Born into a military family, Li is a true believer in diligence, discipline and integrity. During an exclusive interview last week with Shanghai Daily, he shared some of his thoughts on the rapid development of commercial real estate in China and its prospects going forward.
A: In terms of transaction value, developers and real estate funds account for 47 percent and 19 percent of the total, respectively. They were the most active investors in China during the first three quarters of this year. They were followed by 14 percent corporate buyers and 7 percent institutional investor, according to our data. In terms of capital sources, foreign buyers have been extremely active this year, far outperforming their domestic counterparts, with probably over 70 percent share in the core asset bracket.
As to property types, offices remained the most sought-after assets, while retail developments, hotels and logistics projects were also attractive to investors. abundant stock of tradable real estate assets in the market. According to our forecast, China’s investment grade real estate assets will grow to US$4.2 trillion by 2020, indicating huge potential for future growth because only 230 billion yuan worth of real estate assets were traded in 2017.
On the other hand, we continue to see a number of positive factors, such as continuously improving infrastructure, accelerating urbanization, cross-regional population flows and consumption upgrading. They will further drive the country’s commercial real estate investment market in the years ahead. That’s particularly true for core areas like Shanghai, where the economy maintains its vibrancy with concentrated resources of industry, technology, capital and talent.
The fact that landlords of office towers here are often renewing leases with tenants every three years instead of 10 years or so, which is quite common in London, also suggests there is enough room for future growth.
A: Chinese investors have slowed their pace in outbound real estate investment this year after the National Development and Reform Commission included real estate and hotels on its list of “sensitive” sectors for offshore investment. That means any deals in those areas could face great scrutiny.
In the meantime, we are seeing an increasing number of Chinese companies expressing interest in making outbound investment in Belt and Road countries, from Southeast Asia, India and the Middle East to Eastern Europe and Africa. We are actively helping these companies to find suitable projects, most involving between tens and hundreds of millions of yuan. The focus is mainly on infrastructure, industry and logistics, warehousing and data centers.