Foreign investors charge into China’s commercial real estate as credit squeeze hurts domestic developers

China’s commercial real estate investment rose to a record 296 billion yuan (US$44.08 billion) in 2018, as the gap left by cash-strapped local investors was closed by overseas investors who jumped on acquisition opportunities, according to real estate service firm Cushman & Wakefield.

The 9.5 per cent rise in commercial property investment from a year earlier - a slowdown from 30 per cent surge in 2017 - comes against a backdrop of international trade frictions, a regulatory clampdown on lending, and a cooling domestic economy.

The credit squeeze weighed negatively on Chinese developers and real estate funds, whose share of total investment retreated to 68 per cent in 2018 from 80 per cent a year earlier.

However, foreign investment rose to 94.6 billion yuan, or 32 per cent of the total, more than double the amount in 2017, according to Cushman & Wakefield.

“Prevailing trade frictions and ongoing economic cooling did little to quench foreign investors’ appetite for property in mainland China,” said Catherine Chen, head of forecasting and capital markets research Greater China at Cushman & Wakefield.

Foreign capital showed a clear preference for China’s first-tier cities, accounting for 45 per cent of total commercial property investment in Beijing, Shanghai, Shenzhen and Guangzhou, up from 25 per cent in 2017. Shanghai was the primary target of foreign capital, accounting for 61 per cent of the total investment in the city’s commercial sector. The foreign investment figure represented a jump of