The View | In global property investments, Singapore and others are stepping in where China left off

The days when Chinese investors top the list of outbound real estate investments worldwide are truly over, a consequence of Beijing’s clampdown on financial risk

In the home market, Chinese buyers are similarly ceding ground to overseas investors, but institutional investors should become more active this year as liquidity conditions improve

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According to Jones Lang LaSalle, Shanghai was the world’s fifth-most-liquid real estate market in 2018, for the second year running. China’s largest city was also the world’s fourth-biggest recipient of cross-border capital. Photo: Xinhua

Published: 3:58pm, 18 Mar 2019Updated: 10:27pm, 18 Mar 2019

Pressure on Beijing to make greater strides in opening up China’s economy to foreign investment has intensified since the trade war erupted last summer. Yet, in China’s commercial real estate market, overseas investors continue to make inroads.

Last December, Blackstone, the acquisitive US private equity fund, bought five office buildings and a shopping centre in Shanghai from Singapore’s Mapletree Investments for US$1.25 billion, a transaction first reported by the Post. According to a report by Bloomberg this month, Blackstone, which has completed a series of major transactions in the Greater China region in the past several months, is now considering acquiring Chamtime Plaza, another large office and retail scheme in Shanghai, from Changjia Group, a local developer.

Indeed, according to a report published by global property adviser Jones Lang LaSalle last month, Shanghai was the world’s fifth-most-liquid real estate market last year, for the second year running, generating investment transaction volumes of US$20.5 billion, compared with US$36.3 billion in London and US$31.4 billion in New York. China’s largest city was also the world’s fourth-biggest recipient of cross-border capital, with foreign investors accounting for over a third of transaction volumes last year.

In China as a whole, overseas buyers acquired more than 78 billion yuan (US$11.6 billion) of commercial property assets last year, representing nearly a third of total investment volumes and amounting to a 60 per cent annual increase in the cross-border share of transactions, according to a report published by CBRE, another international property adviser, in January.

The stronger presence of overseas buyers in China’s property market stems partly from Beijing’s deleveraging campaign, which resulted in a tightening of banks’ lending standards, curbing domestic demand for real estate assets and leading to an acceleration of disposals by mainland investors. CBRE notes that “the average gearing ratio of 80 per cent among China’s listed developers forced them to reduce corporate leverage further [in 2018], resulting in ongoing demand for asset disposal[s] and portfolio optimisation”.

.css-1m2rp1p{color:#34b8b5;}The View | In global property investments, Singapore and others are stepping in where China left off

The View | In global property investments, Singapore and others are stepping in where China left off