Investment in Beijing's commercial property sector rises

The investment sentiment in the capital's commercial property sector this year has gradually warmed up, with the value of major transactions in the first three quarters reaching 32.3 billion yuan ($4.42 billion), higher than that of the whole year of 2022, industry statistics show.

A total of 39 major transactions were achieved in the first three quarters, with the number reaching a five-year high, according to Cushman & Wakefield, an international real estate service provider. However, the average value of those deals has fallen, with 60 percent of them witnessing a transaction value lower than 500 million yuan.

Statistics from JLL, another international real estate service provider, show a similar trend. Beijing's investment market witnessed a rebound in the proportion of office property transactions in the third quarter, according to JLL's latest report.

Joy City listed its COFCO Landmark project for public sale on the Beijing Equity Exchange and announced at the end of the quarter that it had signed an equity transfer agreement with China Post Life, corresponding to a transaction amount of 4.26 billion yuan.

In addition, Jianan Building Tower Two, formerly held by China Aoyuan and located in Beijing's South Second Ring Road, was sold through foreclosure for 3.48 billion yuan.

Meanwhile, the growth momentum of investor focus on rental housing continued. Currently, logistics, rental housing, and assets with apartment conversion possibilities continue to receive voluminous attention, with both domestic and foreign investors actively seeking investment opportunities, according to JLL's research.

According to Cushman & Wakefield's report, investment-oriented purchases have been increasing in the Beijing's commercial property market in the first three quarters, accounting for 57 percent among all types of buyers. That proportion has exceeded that of 2022.

"Since the investment value of many quality assets have been quite attractive, investment-oriented buyers are back the market," said Liu Bing, managing director of the capital market of Cushman & Wakefield.

He believes REITs will be more popular with institutional investors with the decreasing assets price and mortgage rates, especially for those REITs focusing on city's core assets.

Jessie Xu, operations director of China and head of Capital Markets North China, JLL, held a different view: "From an investment perspective, prices at this stage are struggling to meet the return expectations of both buyers and sellers, and the adjustment in market expectations is expected to continue further."