It is expected that the commercial property market in China will see growth like never witnessed before. This will not just be in the country’s first rate cities such as Shanghai and Bejing, but second and third tier cities will also see huge growth in their commercial property market.
According to a recent report produced by Jones Lang LeSalle: ‘Second- and third-tier cities are expected to reap maximum gains from China’s ongoing urbanization drive with property projects in these regions increasingly catching the fancy of overseas investors…Property prices have been on the boil for some time in China with demand far outpacing supply as prices head north, prompting fears of asset bubbles. Though the government took steps to cool down the investment frenzy, it has in no way diminished the allure for prime space in smaller cities.’
The commercial property market in the Far East is experiencing some real boom years. According to recently released data from the National Bureau of Statistics (NBS): ‘During the first five months of this year, foreign investment in the property sector grew 57.3 percent year-on-year to 26.6 billion yuan (2.84 billion euros).’
Jones Land LeSalle believe that ‘by 2020, many of the first-tier cities like Shanghai, Beijing, Guangzhou and Shenzhen will only account for 10 percent of the commercial property market, says a report from property consultancy.’
The Jones Lang LaSalle report points specifically to cities such as Shenyang and Dalian as emerging commercial property investment locations in China. In fact, just last year Blackstone Group, one of the worlds largest private property investment firms, reached an agreement with Great Eagle, one of Hong Kong’s biggest real estate developers, to invest in a large scale property project in the city of Dalian.
Wang Zhe, general manager of Tianjin-based Lecheng Real Estate Co Ltd, says a significant number of foreign property funds have approached his firm about the possibility of investment in China. ‘Obviously, they are betting on the huge growth potential of China’s retail sector, and thus the opportunity of a higher yield from investment in commercial property,’ Wang said
