Beijing's commercial real estate investment market sees boost thanks to economic rebound

Beijing's commercial real estate investment market saw a notable increase in market vitality, fueled by the economic recovery, industry experts said.

According to research by international real estate service provider Savills, the capital's commercial property market saw transactions valued at 6.735 billion yuan ($979.56 million) in the first quarter, a surge of 60.8 percent compared to the same period last year.

Despite a slower than expected rebound in the Beijing real estate market, the upturn of market vitality indicated that a bottoming-out in the real estate sector is the prevailing trend, according to Anthony McQuade, managing director of Savills North China.

As the overall market climate continues to improve, it is expected that more investment institutions will grasp the opportunity to increase investment this year for greater profits, and the market is expected to witness more large-scale investment transactions, he added.

In the first quarter of 2023, the transaction of Suning Life Plaza, a complex with a total area of nearly 100,000 square meters consisting of both office and retail, attracted market attention. CapitaLand completed the acquisition of the complex for 2.8 billion yuan, according to JLL, another international real estate service provider. This transaction further demonstrates foreign investors' long-term positive view of core assets in Beijing, despite short-term market fluctuations.

"Consumer-related infrastructure projects" were announced to be included in China's REIT regime, providing significant benefits to retail properties. On March 24th, China's National Development and Reform Commission announced to further expand the asset scope of REITs' pilot program, including department stores and shopping centers. In addition, investors active in the market continued to be optimistic about cash-flow-generating properties, such as offices, rental apartments and logistics properties. Such investment opportunities tended to provide long-term stable cash flow and potential value-add.

"Broadening the REIT pilot to include department stores and shopping malls is not only a significant boon for the retail sector but also a shot in the arm for the commercial real estate investment market," said Jessie Xu, Operations Director of China and Head of Capital Markets North China, JLL.

"Domestic and foreign investors began actively seeking investment opportunities in the first quarter of this year. We expect that the arrival of commercial real estate REITs policies will significantly enhance the turnover of retail assets in Beijing and continue to boost confidence in the commercial real estate market."