(Sourced from China Money Network)
The Chinese city of Shanghai has become the top destination for real estate investment in Asia Pacific, squeezing out Tokyo from the number 1 spot in the fourth quarter of 2016. Globally, Shanghai took the fifth spot after New York, London, Los Angeles and Paris.
According to real estate investment and consultancy firm Jones Lang LaSalle (JLL), Shanghai’s strong performance was driven by large transactions including ARA Asset Management’s $2.91 billion investment in the Century Link complex in October, which was the biggest single-asset property transaction in Asia Pacific in 2016.
In the retail sector, the largest transaction of the year was Chongbang Development’s $825 million buyback of an 80% equity stake in Shanghai’s Jinqiao Life Hub. Other high profile deals included the SCPG Holdings Properties portfolio that purchased by China Vanke from the Blackstone Group for $1.9 billion.
“Domestic capital was the main driver of real estate transaction volumes in 2016, with domestic investors often outbidding foreign investors in many transactions. We believe that China – particularly Tier 1 cities – remains attractive to foreign investors as the market matures,” JLL’s head of research for China, Joe Zhou, said in a statement.
Beyond cities, the overall transaction volume of properties in the Asia-Pacific region in Q4 2016 increased by 21% year-on-year, while the total volume of property transactions rose 5% in 2016.
“With political upheavals such as Brexit and the surprising U.S. election result, an increasing number of investors are looking at opportunities in Asia Pacific and specifically China,” Zhou added.
Real estate transaction volumes in the fourth quarter of last year totaled $15.5 billion in China, $7.4 billion in South Korea, and $7.2 billion in Japan, as buyers aimed to close deals before the year-end.
The regional outlook remains positive with buoyant investor and occupier activity in 2017. “While the uncertain political environment of 2016 is set to continue into 2017, real estate assets continue to attract capital, preserve value and serve as a crucial part of a diversified global investment portfolio,” says Dr. Megan Walters, Head of Research Asia Pacific at JLL.
“Continued appetite for real estate is expected to see investment volumes hold up, with core markets such as Sydney, Tokyo and Singapore attracting interest. We expect stronger activity in Indian real estate, with investors likely to be interested in Southeast Asian countries such as Vietnam and the Philippines that are showing better prospects on rental growth,” he adds.