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China’s commercial property investment to stay on fast track till 2020

COMMERCIAL real estate investment in China will jump 45 percent from 2016 to 260 billion yuan (US$38 billion) by 2020 and the market is expected to shift into medium-liquidity phase around 2025 as it continues to mature, world's leading property services provider CBRE said in a latest report.

The two gateway cities of Beijing and Shanghai, among others, will represent a combined 60 percent of the country's commercial real estate transaction volume in 2020 while six high-potential cities, namely Guangzhou, Shenzhen, Chengdu, Chongqing, Tianjin and Wuhan, are forecast to account for 36 percent of additional transaction volume, according to the white paper entitled "Towards 2020: China Investment Strategy."

"Looking ahead, six fundamental drivers -- infrastructure, urbanization, the Belt and Road initiative, the 'Made in China 2025' strategy, demographic shifts and consumption upgrade -- are expected to shape the commercial property investment strategy," said Sam Xie, head of research, CBRE China. "Enhanced demand, increased allocations and rising Transaction Activeness Ratio will substantially drive the asset value of prime commercial real estate."

In the coming four years, more domestic institutional investors will look towards commercial real estate as a smart addition to their investment portfolio with major investors including insurance companies, real estate private equity funds, developers and cross-border investors allocating 1 trillion yuan for commercial real estate investment, CBRE predicted.

Valued at US$3.4 trillion in 2016, China's investible commercial real estate ranked the second highest in the world but the country is still in the low-liquidity phase due to a relatively low TAR, according to the report.


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