Chinese developers renovate run-down buildings to gain foothold in Beijing, Shanghai
In the first half of this year Beijing had less than 1 million sq m of completed and ongoing conversion projects, out of the city’s total 47 million sq m of commercial space
In Beijing and Shanghai, as in other major cities across the world, land for new development is scarce due to government restrictions and the sheer difficulty involved in getting any existing buildings in decent sites torn down.
So Chinese developers have been looking in a different direction recently: buying older run-down blocks to redesign and renovate, in an effort to gain a foothold in the two giant cities.
But even that process is easier said that done, and examples are rare.
According to the International Federation of Finance & Real Estate, an association of real estate and finance professionals, in the first half of this year Beijing had less than 1 million square metres of completed and ongoing conversion projects, out of the city’s total 47 million sq m of commercial space.
ZRiver Capital, a private equity and asset management firm, however, can boast of being one of the very few to have two such projects ongoing at the same time: a hotel conversion near Beijing’s Financial Street area – which it bought for 2 billion yuan (US$300 million) in 2016 – and the revamp of a flagging department store right on the North Third Ring Road which it bought for 2.5 billion yuan the same year.