Positive Outlook for China’s Commercial Property Market

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The continuing expansion of China’s influence on the global economic stage has seen money flooding into the country from multinational companies looking to expand into the country’s massive domestic market.

With Shanghai being a particular focus, overseas investment in commercial property is also having a knock on effect for residential sales and values in certain areas.

Although China's GDP has in fact been slowing, there is still economic growth which outstrips many of its western competitors. Major new stores continue opening in Shanghai as retail confidence remains high.

This has led to ground-floor rents in high profile retail areas increasing 1.7% quarter-on-quarter and 11.6% year-on-year, reaching a high of 54.7 yuan per sq m per day.

Due to limited new supply, the average vacancy rate of Grade A offices in Shanghai has remained stable at 5%, although surprisingly rents for the same type of commercial properties have dropped slightly by 1.5% quarter-on-quarter. This is the first decrease since the third quarter of 2009.

The figures for 2012 are slightly skewed due to many negotiations being undertaken which have yet to be completed, meaning that a significant increase in purchase statistics for 2013 is already something of a certainty.

"On one hand, a number of deals are in the pipeline after lots of negotiations were conducted last year. On the other hand, the top management of international real estate funds are also under pressure because few deals were concluded last year," said Andy Zhang, managing director of Cushman & Wakefield China.

With plenty of new developments also underway, including major projects for warehouses, offices, hotels, retail and mixed-use developments, there will be no shortage of opportunities for foreign investors to get involved in the Chinese market over the coming year.

You will inevitably have to send money abroad to China if you are looking to make a property investment, so be sure to compare the market to secure a profitable exchange rate.

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Positive Outlook for China’s Commercial Property Market

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