Foreign investors target Beijing property
Foreign investors will play a bigger role in driving Beijing's property investment market this year due to their increasing financing activities in Asia, industry experts said.
In its largest-ever fundraising activity, US private equity firm Blackstone raised $7.1 billion to invest in real estate across Asia, including the Beijing realty market.
UK-based real estate asset manager AEW Capital Management also announced that it had raised $1.2 billion for an Asia-Pacific property fund that includes Beijing as a target market.
"As foreign investors become more active in Asia, we expect to see them buy more assets in China, especially Beijing," said Michael Wang, head of capital markets for North China in JLL. "Meanwhile, as the financing conditions tighten for domestic players this year, foreign investors will have a bigger chance than before."
Postal Savings Bank of China, for instance, has purchased the new Everbright Center at Tongzhou area of Beijing for 4 billion yuan ($597 million), the highest profile transaction in the capital during the second quarter.
The performance of Beijing's bulk property investment market in the first half of 2018 was flat, with only 14 transactions amounting to 10.2 billion yuan, a 50 percent year-on-year decrease, according to a report from Savills.
That said, institutional investors are still eyeing Beijing's real estate opportunities, especially those that are scarce in high-quality locations or those that have stable rental returns, according to Savills.
According to Wang from JLL, the volume of institutions' investments in Beijing's property this year will probably exceed last year's 25 billion yuan.
In the first half of 2018, institutional investors have recorded a total of 11 full sale transactions in Beijing's property market, valued more than 8 billion yuan, according to an industry report from Colliers International.
Although investors are most interested in office buildings, the actual transactions mainly center on the hotel and retail segments, accounting for 42 percent and 31 percent of the total transaction volume respectively, Colliers International's report said.
In the second half of this year, more tradable assets will surface and more block trade activities could be expected due to the tightening of domestic liquidity and the improvement in macroeconomic factors, according to Colliers International.
Tradable properties will be mainly in non-core areas, and old projects with renovation potential in central areas will also attract sustained attention from investors, Colliers International's report said.
Wang Jiaqi and Fan Hang contributed to this story.