China outpaced the United States and Britain in commercial property sales in the first half of the year, underpinning hopes domestic demand will quicken a recovery in the mainland economy. Analysts attributed the extraordinary gap between the East and the West to ample liquidity on the mainland, strong interest from buyers driven by the prospect of real estate investment trusts (reits) and the rosy outlook for the retail industry. But they remain divided over whether the momentum would be sustainable this year as uncertainty over monetary policy grows. The total value of deals in the commercial property sector on the mainland reached US$31.2 billion in the six months to June, according to a survey by US research firm Real Capital Analytics. US sales were US$16.2 billion during the period and Britain's were US$13.7 billion. A report by the Ministry of Land and Resources last month revealed a 1.07 per cent year-on-year growth in average prices of land designated for commercial use in the first half. That is a greater gain than the 0.07 per cent advance in the average price of residential land and in sharp contrast to a 0.73 per cent drop in prices for industrial land. A significant proportion of the sales was believed to have been financed by easy credit from state-owned banks, which were urged to lend more to combat a sharp economic slowdown. The splurge led to more than 7.7 trillion yuan (HK$8.75 trillion) worth of new loans between January and the end of last month, almost triple the amount over the same period last year. Deals involving office buildings and shops had largely contributed to rising commercial property sales. The amount of office space sold rose 13 per cent in the first seven months, while sales of property for commercial use gained 22 per cent, the National Bureau of Statistics has said without giving more details. The strong momentum has defied a sluggish leasing market, which was supposed to form a significant part of revenue streams for commercial property owners. In the second quarter, Shanghai's top-grade office market saw its first quarter-on-quarter increase in vacancies in recent years, hitting 14.1 per cent, according to property brokers Colliers International. At the same time, average rents fell 9 per cent from the first quarter. But the imminent introduction of reits, a trust product used for fund-raising that pays investors dividends from rents earned by underlying properties, and keen investor interest in the retail industry had supported the sector, analysts said. 'Domestic buyers, especially some state-owned enterprises, are buying commercial properties either with the idea that they would put them in future reits or for their own use,' said Michael Kalibaner, head of research at Jones Lang LaSalle in Shanghai. Hua Changjin, an analyst with GF Securities, said overseas buyers remained active in snapping up retail property assets. The Ministry of Commerce predicts full-year retail sales will rise more than 16 per cent from a year ago. But some analysts fear tighter monetary policies could dampen activities for the rest of the year. Dan Fasulo, the managing director of Real Capital, told Bloomberg that China's growth 'may not be sustainable at this level'.