CBRE Global says it may invest in office space in China even as rents fall
CBRE Global Investors, which manages more than US$90 billion of property assets, is seeking to invest in offices in China as foreign companies expand in the country, even as rents fall in some cities amid oversupply.
The global real estate management firm, which has only one office property in Shanghai, is looking at office projects in Beijing, Shanghai, Guangzhou, and in as many as 10 second-tier cities, including Chengdu, Wuhan, and Suzhou, the fund's Greater China country manager Richard van den Berg said at a conference in Hong Kong on Thursday.
Prime office rents on the mainland fell an average 2 per cent in the first quarter from three months earlier to 337 yuan (HK$426) per square metre per month, the first decline since the third quarter of 2009, according to Chicago-based commercial property firm Jones Lang LaSalle.
The fund would consider investing in cities with at least two million square metres of "investment-grade office space", said van den Berg.
The cities must also have demand for space from international companies and tenants whose businesses are based outside the cities' boundaries, he said.
CBRE Global Investors acquired a majority of ING Groep's real estate investment business in 2011. The company managed about US$3.7 billion of assets in the Asia-Pacific region.
Home prices in major Chinese cities rose at the fastest pace in more than two years in May, defying the government's three-year campaign to cool the real estate market.
While there is no bubble in China's real estate market, there are some cities with oversupply of new properties that are clearly overpriced, van den Berg said.
"Fundamentals are still very favourable in many sub-markets. With the market corrections having taken place over the past few years, they now offer very interesting investment conditions especially for mixed-use developments."
CBRE expects 2013 and 2014 to be a "good time" to invest in China's property market as it slows due to the government's tightening policies, van den Berg said in an interview last year.
CBRE's Chinese partners have included China Vanke and Longfor Properties.