While Chinese investment floods into the UK market, Western developers are cashing in on China’s growing consumerism by investing in warehouses, shopping malls and other western-style retail projects in the country, says the Wall Street Journal.
Developers and their subsidiaries have so far this year raised £2.1bn for Chinese projects, eclipsing the £1.3bn raised throughout 2012.
“I’m seeing more overseas property companies raising funds in China after the leadership changeover and the subsequent policy changes indicated that the business environment is likely to remain conducive for the property sector,” explained Xia Hang general manager at South Korea-based SK China Real Estate Co.
After a dip in fundraising in 2012 — because of uncertainties stemming from China’s leadership change and its property-tightening measures — investors are once again eyeing the country’s property potential.
Under its new leadership China is heading towards a more market-based economy, while growing affluence is boosting domestic demand. This is generating interest in retail and logistics projects with investors eager to put their money in retail-led mixed-use projects.
Overseas developers have been investing in Chinese property for some years but, until recently, the focus was on residential rather than commercial property.
In November the warehouse developer and operator Global Logistic Properties launched a China-focused infrastructure fund with committed equity of $1.5bn and investment capacity of more than $3bn.
“As demand for modern logistics facilities in China continues to grow, this fund ensures we have increased funding in place to capture a significant share in a $2-trillion market opportunity,” said Jeffrey Schwartz, of Global Logistic Properties.
That same month US-based industrial real-estate developer and operator Prologis teamed up with HIP China Logistics Investments to jointly raise capital for a China logistics fund. The fund has a potential investment capacity of over $1bn.
Other key players have now entered the market and the Chinese investment trend looks set to continue. The Sydney-based property and infrastructure firm Lend Lease Group has announced it is planning to raise a retail-property fund next year. The company has chiefly focused on construction and property management but says it wants to invest more in the country in the future.
