\n Forecast total transaction volume to exceed RMB50 billion in 2021 Investors eye on tier 2, 3 cities with appetite for Industrial logistics, cold chain, data centers <\/p>\n
- \n
- Transaction volume in Guangzhou and Shenzhen exceeds RMB50 billion for four consecutive years, forecast similar volume for 2021 while transactions extend to tier 2 cities in the region.<\/li>\n
- Foreign investors increase investment in the Greater Bay Area especially low value assets in Southern China for geo-strategic asset allocation.<\/li>\n
- Though transactions are still dominated by traditional industries, the mature transport network favours the development of new property types, with industrial logistics, cold chain, and data centers preferred by investors.<\/li>\n<\/ul>\n<\/div>\n<\/div>\n
\n <\/p>\nHONG KONG SAR –\u00a0Media OutReach<\/a>\u00a0–\u00a012 August 2021\u00a0<\/b>–\u00a0Global real
\nestate services firm Cushman & Wakefield<\/b> announces Greater
\nBay Area Commercial Real Estate Investment Market Review and Forecast 1H 2021 today.
\nThe rapid development of the Greater Bay Area in recent years, coupled with a
\nmaturing transport network, has driven industrial transformation and shifts in
\nreal estate investment in the region. Apart from Shenzhen and Guangzhou,
\ninvestors also set eyes on tier 2 cities. Investment portfolios are increasingly diversified to include new types of properties such as industrial logistics,
\ncold chain and data centers, in addition to traditional office buildings and
\nshopping malls.<\/p>\n
\n <\/p>\n\u00a0<\/p>\n
\n <\/p>\n![](\"https:\/\/release.media-outreach.com\/release.php\/Images\/Thumb\/520x0\/169233\/combine-eng.jpg#image-169233\")
<\/p>\n
\n <\/p>\nSource: Cushman
\n& Wakefield
Chart 1: Transaction
\nvalue of CRE investment in the Greater Bay Area in recent years
Chart 2:
\nRatio of domestic and foreign investment
Chart 3: % of
\nCRE transactions by property type in Greater Bay Area
Chart 4: Some of the transactions in warehouses, logistics and data centers
\nin the Greater Bay Area in 2020 and 2021<\/span><\/h5>\n
\n
\n
\n
\n
\n
\n
\n
\n
\n <\/p>\nCommercial real
\nestate investment transaction value in the Greater Bay Area<\/u><\/b><\/p>\n
\n <\/p>\nThe launch of the Greater Bay Area initiative
\nin 2017 has drawn immediate attention from owner-occupiers, private investors
\nand funds. Commercial real estate (CRE) investment transactions have turned vibrant,
\nwith Guangzhou and Shenzhen recording annual transaction value of over RMB 50
\nbillions for four consecutive years. Such transactions include headquarters
\npurchase by corporations such as Li Ning, Qiaodan Sports, and Shenzhen
\nExpressway in Shenzhen. Driven by TMT (technology, media, telecom) companies, small
\nscale single-block buildings in Guangzhou have also attracted owner-occupiers.<\/p>\n
\n <\/p>\n\u00a0<\/p>\n
\n <\/p>\n“Outline Development Plan for the
\nGuangdong-Hong Kong-Macao Greater Bay Area” was officially announced in 2019,
\nsetting a major development milestone for CRE investment market in the Greater
\nBay Area.With more CRE investment opportunities emerging in other Greater Bay
\nArea cities, investors have been drawn to cities other than Guangzhou and
\nShenzhen since 2019. The transaction valule has increased from RMB2.7 billion
\n(4% of the total) in 2019 to RMB3.4 billion (7% of the total) in 2020. Over RMB200
\nmillion (1% of the total) of such transactions were recorded in 1H21. Total
\ntransaction volume for the full year of 2021 is expected to exceed RMB 50
\nbillion, proving investors’ persistent \u00a0interest
\nin the region. (Chart 1)<\/p>\n
\n
\n
\n <\/p>\nDistribution
\nof investors in the Greater Bay Area<\/u><\/b><\/p>\n
\n <\/p>\nCapitals in the Greater Bay Area used to be predominately domestic,
\naccounting for over 80% of the investment considerations. Yet foreign investors
\nalso pay close attention to this market and their investment activities are increasing
\nyear after year, especially in Guangzhou. With an outstanding macro-economic performance
\nand strong spending power, coupled with low availability of quality mixed-use commercial
\nportfolio in core locations, Guangzhou has become the investment target of
\nforeign investors.<\/p>\n
\n <\/p>\n\u00a0<\/p>\n
\n <\/p>\nMs. Queeny So, Cushman & Wakefield’s Executive Director, Capital
\nMarkets, China,<\/b> shares, “Foreign investors have strengthened their
\ninvestment in the Greater Bay Area since 2018 and 2019. By 1H21, ratio of
\nforeign investment has surged from below 20% in the past to 25% (Chart 2). We
\nbelieve foreign investors have used to hold fewer assets in southern China. Yet
\nCRE investment in the Greater Bay Area, as a key strategic zone of China, creates
\na golden opportunity for geo-strategic asset allocation, leading to a surge of
\nsuch transactions. We believe foreign investors will continue to look for new
\ninvestments in various Greater Bay Area cities. “<\/p>\n
\n <\/p>\n\u00a0<\/p>\n
\n <\/p>\nTypes of CRE investment in the Greater Bay
\nArea<\/u><\/b>
\n <\/p>\nStrong consumption power of the Greater Bay
\nArea drives frequent CRE transactions (Chart 3). Of the various CRE types, traditional
\nasset class like office buildings and shopping malls in the Guangzhou-Shenzhen
\narea constituted the most transactions. With CRE asset value softened, many
\noccupiers and private investors are acquiring their current rental premises and
\nturn them into their headquarters. Key investments into major transactions are
\nstill dominated by insurance capital For instance, the biggest transaction in
\nShenzhen was the RMB6.6 billion purchase of Vanke Yuncheng project by Ping An
\nInsurance. Number of CRE transactions in Shenzhen is expected to be
\nrecord-breaking this year, with total transaction volume similar to that of
\nprevious year. Average transaction volume may decline to around RMB1 billion
\nper transaction, slight drop from year 2020.<\/p>\n
\n <\/p>\n\u00a0<\/p>\n
\n <\/p>\nIn Guangzhou, the scarcity of high-quality
\noffice buildings in core locations has steered investors to other projects such
\nas shopping malls. In 1H21, the ratio of such transactions therefore rose to
\nover 30% of overall CRE transactions. For instance, Link REIT acquired Happy
\nValley in Guangzhou this year at RMB 3.205 billion. Meanwhile, occupier-type
\ninvestors are more drawn to single-block office properties. <\/p>\n
\n <\/p>\n\u00a0<\/p>\n
\n <\/p>\nAs the public transport network in the
\nGreater Bay Area matures, not only has commute time and distance greatly reduced,
\nbut it also results in industrial transformation and population influx. This
\nhas driven the rise of economy in tier 2 and 3 cities, resulting in new CRE
\ninvestment types such as industrial logistics, cold chain, data centers, etc.,
\nall of which are favored by investors and have recorded perpetual transactions
\n(Chart 4).<\/p>\n
\n <\/p>\n\u00a0<\/b><\/p>\n
\n <\/p>\nMr. Alva To, Cushman
\n& Wakefield’s Vice President, Greater China, <\/b>concludes, “Domestic
\ninvestors in the Greater Bay Area and cash-rich real estate funds have turned active
\nand kept close eye on opportunities in the market, resulting in an upsurge in CRE
\ntransactions in 1H21. However, as transport and infrastructure facilities in
\nthe region gradually complete and coupled with policy supportother Greater Bay
\nArea cities are getting more traction from investors. We believe investors will
\nturn to opportunities in tier 2 cities outside Shenzhen and Guangzhou. Investment
\nprojects will also extend from traditional office buildings and shopping malls
\nto logistics, cold chain, and data centers, resulting in a more diversified CRE
\nmarket in the region.”<\/p>\n
\n <\/p>\n\u00a0<\/p>\n
\n <\/p>\n