Commercial property investment to surge

Skyscraper window cleaners clean the exterior of the Guiyang International Trade Center in Guiyang, Guizhou province, on March 15. (Photo: Xinhua)

China's annual commercial real estate investment is expected to exceed 300 billion yuan ($47 billion) for the first time in 2022.

It shows that China's economy is on track of recovery this year as countercyclical policies and structural transformation ensure stable growth, said a report issued by CBRE, a commercial real estate services and investment firm.

China's commercial real estate investment enjoyed a solid recovery last year as total transaction volume surged 33 percent year-on-year to reach 273 billion yuan. The figure for the coming year is projected to grow between 10 percent and 15 percent to race past 300 billion yuan due to the strong market, said the CBRE report.

A CBRE survey of Chinese investor intentions found that purchasing plans reached a new high, with 59 percent of respondents saying they intend to buy more in 2022.

Purchasing intentions among domestic and foreign investors became stronger than in the previous survey. Interest among overseas buyers is especially high, with Shanghai and Beijing rated among the top five cross-border investment destinations in the Asia-Pacific region.

"As the country is transforming to a low-carbon economy with high value-added technology, growth in investment in biomedical, electronics and telecoms, integrated circuits, new energy vehicles and other high-tech manufacturing industries will accelerate," said Xie Chen, head of research with CBRE China.

Xie suggested investors target real estate benefiting from the new economy such as logistics, warehouses, business parks and data centers, and seize cyclical opportunities in the office and retail sectors.

Emerging as one of the markets that underwent a strong rebound in 2021, China's commercial real estate sector saw its transaction volume reach $39 billion, up 21 percent year-on-year, said a report published by JLL, a global real estate service and investment management firm.

By category, investment in offices took the lion's share in the commercial property market, accounting for 37 percent of total transaction volume. Logistics transactions grew significantly to 38 billion yuan in 2020, from 16.9 billion yuan in 2019, and jumped to 59.1 billion yuan in 2021. Large-scale portfolio transactions boosted retail investments, and alternative transactions hit a record high, the report added.

Destination-wise, Shanghai remained the most popular among Chinese cities by attracting more than 40 percent of total investment. Beijing also proved to be a preferred destination by investors due to its scarce supply of assets in core areas.

The past year held great importance for investors as China launched real estate investment trusts, which boosted liquidity and transparency in the market. The pilot REITs have outperformed expectations from the beginning, JLL said.

China kicked off sales of its first batch of nine publicly traded REITs on May 31, presenting a great leap forward for the country's asset management industry, Xinhua News Agency reported.

The nine REITs are expected to channel investment into infrastructure projects, including highways, industrial parks, storage and logistics, and sewage treatment.

Rental housing was another sector that drew investment interest in 2021, with numerous government policies and initiatives promoting the sector, the JLL report said.

"Influenced by structural deleveraging in the Chinese market over the past year, real estate developers have been selling assets in exchange for liquidity. Investors capitalized on this unique opportunity to acquire assets. Buyers who purchase homes for their own use also expanded their asset portfolios according to their needs," said Pang Shudong, head of capital markets with JLL China.

In 2022, with expected interest rate cuts and policy easing, more confidence will be injected into the property market, said Pang, who forecast even more active investments in the long run.