Page 204 - 2020 White Paper on the Business Environment in China
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0 White Paper on the Business Environment in China
properties amounted to 78 billion yuan (US$11.6 term, China will not expand financing channels
billion) in 2018, representing a 60 percent year- for domestic real estate companies, but large
on-year growth. And the consultancy expected companies will have the advantage in securing
the active momentum to continue. In the future, loans. The government will allocate resources to
a fierce rivalry for real estate asset managers will improve the development in areas such as shanty
continue for quite some time. The sustainability town enovation programs, affordable housing
of commercial property such as high-end office projects and rental housing. Faced with high
building depends on the asset management to a repayment pressure, domestic property owners
substantial degree (Wang, New Era). are expected to have to offload their properties to
pay down debt. The market is forecast expected a
Commercial price correction in 2019, when sellers become more
pressured to sell properties in the slow market.
Foreign investors have significantly increased In addition to the conventional foreign capital
their presence in China’s commercial real estate investment destinations of Beijing and Shanghai,
sector, investing 78 billion yuan (US$11.5 billion) which attracted 85 percent of foreign investment in
in 2018, a record since 2005 and up 61.5 percent 2018, the newly opened Hong Kong-Zhuhai-Macao
year-on-year. Throughout 2018, commercial real Bridge in late 2018 will boost the Guangdong-Hong
estate transactions hit a record high of 251.7 billion Kong-Macao Greater Bay Area by attracting more
yuan, up 4 percent year-on-year, according to a attention from property investors. The integration
report on China’s 2019 property market outlook by and development of the Greater Bay Area is possibly
global real estate consultancy CBRE. Foreign capital the most exciting real estate opportunity in China.
flows into the sector snowballed from 26 billion With a population of 67 million and GDP of US$1.3
yuan in 2016 to 48.3 billion yuan in 2017, the data trillion, the Greater Bay Area is comparable with
showed. International investors are embracing economic powerhouses such as the San Francisco
more opportunities to secure deals amid weaker Bay Area, with a population of 7.6 million and GDP
competition from their domestic counterparts, of US$800 billion, and the Greater Tokyo Area, with
said James Macdonald, head and senior director 44 million residents and US$1.8 trillion in GDP. Yet
of Savills China research. Over 56 percent of the the Greater Bay Area will overtake both by 2030,
nation’s commercial property investment went to when GDP is expected to hit US$4.62 trillion and its
Shanghai, which is considered a stable and long- population more than 100 million, according to the
term investment destination among investors both report (Wang, Commercial). CBRE Group predicts
from home and abroad. Both of the two largest that the invested assets of property funds eyeing
deals made by foreign investors in 2018 took China will rise over 35 billion dollars from 2019
place in Shanghai. These were CapitaLand’s and to 2024, with investment mainly on value-added
Singapore sovereign wealth fund GIC’s purchase and opportunistic real estate projects. In 2019,
of Shanghai’s tallest two towers at Harbor 55, and foreign investors show greater interests in China’s
Blackstone’s purchase of Mapletree Business City. commercial property. Luo Zhenyu, president of
The former deal, which cost CapitaLand and GIC Singapore’s CapitaLand said, “China’s opening
12.8 billion yuan, is also the biggest single purchase financial sector will further meet the growing
CapitaLand has made in the Chinese mainland demand of foreign investors’ business and office
so far. Blackstone’s new property is an office and expansions” (Xinhua, Foreign Investors).
retail complex, costing 8.3 billion yuan. Compared
to 2017, foreign investors became more proactive
in 2018, and they will maintain that momentum in
2019, said Yip with JLL. CBRE also forecast foreign
investors’ spending spree will continue beyond
2020. A total of US$62 billion of implied investment
volume will be deployed across the Asia-Pacific
region in 2019-24, US$35 billion of which will target
high value-added and opportunist properties in
the China market. It is expected that in the short
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properties amounted to 78 billion yuan (US$11.6 term, China will not expand financing channels
billion) in 2018, representing a 60 percent year- for domestic real estate companies, but large
on-year growth. And the consultancy expected companies will have the advantage in securing
the active momentum to continue. In the future, loans. The government will allocate resources to
a fierce rivalry for real estate asset managers will improve the development in areas such as shanty
continue for quite some time. The sustainability town enovation programs, affordable housing
of commercial property such as high-end office projects and rental housing. Faced with high
building depends on the asset management to a repayment pressure, domestic property owners
substantial degree (Wang, New Era). are expected to have to offload their properties to
pay down debt. The market is forecast expected a
Commercial price correction in 2019, when sellers become more
pressured to sell properties in the slow market.
Foreign investors have significantly increased In addition to the conventional foreign capital
their presence in China’s commercial real estate investment destinations of Beijing and Shanghai,
sector, investing 78 billion yuan (US$11.5 billion) which attracted 85 percent of foreign investment in
in 2018, a record since 2005 and up 61.5 percent 2018, the newly opened Hong Kong-Zhuhai-Macao
year-on-year. Throughout 2018, commercial real Bridge in late 2018 will boost the Guangdong-Hong
estate transactions hit a record high of 251.7 billion Kong-Macao Greater Bay Area by attracting more
yuan, up 4 percent year-on-year, according to a attention from property investors. The integration
report on China’s 2019 property market outlook by and development of the Greater Bay Area is possibly
global real estate consultancy CBRE. Foreign capital the most exciting real estate opportunity in China.
flows into the sector snowballed from 26 billion With a population of 67 million and GDP of US$1.3
yuan in 2016 to 48.3 billion yuan in 2017, the data trillion, the Greater Bay Area is comparable with
showed. International investors are embracing economic powerhouses such as the San Francisco
more opportunities to secure deals amid weaker Bay Area, with a population of 7.6 million and GDP
competition from their domestic counterparts, of US$800 billion, and the Greater Tokyo Area, with
said James Macdonald, head and senior director 44 million residents and US$1.8 trillion in GDP. Yet
of Savills China research. Over 56 percent of the the Greater Bay Area will overtake both by 2030,
nation’s commercial property investment went to when GDP is expected to hit US$4.62 trillion and its
Shanghai, which is considered a stable and long- population more than 100 million, according to the
term investment destination among investors both report (Wang, Commercial). CBRE Group predicts
from home and abroad. Both of the two largest that the invested assets of property funds eyeing
deals made by foreign investors in 2018 took China will rise over 35 billion dollars from 2019
place in Shanghai. These were CapitaLand’s and to 2024, with investment mainly on value-added
Singapore sovereign wealth fund GIC’s purchase and opportunistic real estate projects. In 2019,
of Shanghai’s tallest two towers at Harbor 55, and foreign investors show greater interests in China’s
Blackstone’s purchase of Mapletree Business City. commercial property. Luo Zhenyu, president of
The former deal, which cost CapitaLand and GIC Singapore’s CapitaLand said, “China’s opening
12.8 billion yuan, is also the biggest single purchase financial sector will further meet the growing
CapitaLand has made in the Chinese mainland demand of foreign investors’ business and office
so far. Blackstone’s new property is an office and expansions” (Xinhua, Foreign Investors).
retail complex, costing 8.3 billion yuan. Compared
to 2017, foreign investors became more proactive
in 2018, and they will maintain that momentum in
2019, said Yip with JLL. CBRE also forecast foreign
investors’ spending spree will continue beyond
2020. A total of US$62 billion of implied investment
volume will be deployed across the Asia-Pacific
region in 2019-24, US$35 billion of which will target
high value-added and opportunist properties in
the China market. It is expected that in the short
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