Unmoved by trade war escalations, China’s commercial real estate market outperforms competitors

Asset turnover, the Greater Bay Area and Beijing’s economic stimulus have all helped China’s real estate market defy global trends and the broad slowdown in its own economy

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Residential and commercial buildings are seen in the Luohu district of Shenzhen. China’s commercial real estate market continues to soar despite setbacks in the broader economy, and the Greater Bay Area looks likely to continue this trend in Shenzhen and other parts of Guangdong province. Photo: Bloomberg

Published: 2:00pm, 20 May 2019Updated: 11:02pm, 20 May 2019

In the past month, China’s fragile economy and financial markets have taken a severe knock. The trade war has unexpectedly intensified, throwing the acuteness of the commercial and economic tensions between Washington and Beijing into sharp relief. Mainland stocks have suffered four weeks of losses, while the yuan is edging closer to its record low versus the dollar.

More worryingly, China’s economy, which appeared to be stabilising earlier this year, has continued to lose momentum. Last month, retail sales grew at their slowest pace in 16 years, while industrial production expanded at its weakest rate since 2009.

Yet in China’s commercial real estate market, investment transaction volumes are surging.

According to a report published this month by property adviser Jones Lang LaSalle investment volumes in the first quarter of this year rose to a record high of US$17 billion. This was the main driver behind the strong performance of the Asia-Pacific region as a whole, where commercial property transactions increased 14 per cent year on year, to an all-time high of US$45 billion.

The surge in real estate investment in China comes at a time when the world’s other big markets are experiencing a decline in transaction volumes. Data from Jones Lang LaSalle shows that commercial real estate investment globally fell 8 per cent in the first quarter of this year to US$156 billion, dragged down by a 22 per cent drop in transaction volumes in Europe and an 8 per cent fall in the Americas.

The decrease in global property deals this year is partly due to a 17 per cent decline in cross-border capital flows, the main driver of commercial real estate investment over the past several years.

Unmoved by trade war escalations, China’s commercial real estate market outperforms competitors

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}Asset turnover, the Greater Bay Area and Beijing’s economic stimulus have all helped China’s real estate market defy global trends and the broad slowdown in its own economy

Asset turnover, the Greater Bay Area and Beijing’s economic stimulus have all helped China’s real estate market defy global trends and the broad slowdown in its own economy