China Nabs “Second Most Liquid Real Estate Market” Title In 2019
China's commercial real estate market climbed into second place in the list for the most liquid real estate this year, with an increase driven by foreign and domestic investment, among others.
Mingtiandi reported that the commercial real estate transactions in China reached a record high of $25 billion during the first half of this year, measured in a report from Jones Lang LaSalle.
The result of the surge was backed up by a "bumper first quarter" where investment volumes climbed up to 174% year-on-year for a total of $17 billion. Daniel Yao, Head of Research for JLL China, said that this was also because of China opening up its capital markets globally. The new record stood as proof of the nation's progress, despite cyclical reasons among other factors.
The first three months of the year posted record investments and other "victories," but demand cooled in the second quarter. A stimulus package from Beijing, however, managed to stoke the first of the economy and has also increased pressure on owners to keep their assets available to the investment market.
In JLL's own report, China's real estate market benefited from the pull-back recently experienced by the UK. The UK had been consistent as the second-most liquid market, but it has problems of its own; specifically, the uncertainty caused by the ongoing Brexit its government is undergoing.
Sigrid Zhou, JLL China research director of capital markets, observed that the market had gone from one dominated by sellers to one peppered with buyers. China's real estate market also had the benefit of receiving investors with "deep pockets" which continued to build assets.
China's appeal to global investors has extended into reality. Canada's Brookfield Asset Management bought the Greenland Huangpu center, a 1.6 million sq ft mixed-use development, for $1.55 billion. Another investor is Singapore's CDL, which also bought a development in Shanghai and a stake in a Chinese developer.
Large domestic players have also been making major deals, with Landsea Group making an acquisition in an office property in Shanghai. These recent activities have all been centered in Shanghai with about $10.9 billion of transactions during the first half of the year. This made it the fourth most liquid city in the world, only behind New York, Tokyo, and Paris.
Yao predicted that the second half of this year will be similar to the first. Shanghai is also expected to remain as the major city of focus for most investors.