China Commercial Real Estate: A Key Investment Territory For 2013

Sales in Beijing’s commercial property surged by an enormous 320.5 percent during the first 10 days of March, following moves by the Chinese State Council to cool the …

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Sales in Beijing’s commercial property surged by an enormous 320.5 percent during the first 10 days of March, following moves by the Chinese State Council to cool the residential market.

From March 1, the sale of a residential property will require an income tax of 20 percent on profit made from the transaction. Previously, the tax was 1 to 2 percent of the total sale price, meaning investors have shifted their focus to the commercial market.

759 units in the commercial sector were sold and registered online from March 1 to 10, accounting for 6.3 percent of all transactions recorded during the period, according to real estate brokerage Century 21.

"It is obvious that investment-oriented purchases of residential housing will be further restrained, and the government intends to weaken the investment characteristics of home buying," said Kou Hailong, general manager of Century 21st Beijing.

"So it is natural that more investors are turning their eyes to commercial properties when other investment channels are limited," he added.

The commercial section of Jin Mao Palace, a top-end residential project close to Beijing’s central business district, will put up 154 units for sale at the end of March, at an average price of 49,800 Yuan ($8,008) per sqm.

However, due to overwhelming demand, registration for the purchases was closed by the end of the first day.

This news comes amid speculation that China will likely see a huge increase in commercial property investment from overseas in 2013, according to industry experts.

"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.

There will be significant increases in large-scale deals in Shanghai’s retail and office sectors, according to a research report from consultant Knight Frank.

The commercial and financial centre of China, Shanghai is a major focus for multinational property companies looking at capitalising on the increasing economic sway the country holds. Although China’s economy has slowed recently, the country appears to be in a perpetual state of expansion, meaning its market will remain buoyant and fruitful, which is extremely attractive to international investors.

"This is a good opportunity to buy a quality commercial property in Shanghai. We anticipate strong leasing interest from both domestic and foreign firms looking for quality and convenience," said John Saunders, chief executive officer of Asia, MGPA.

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