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January 13, 2010

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Real estate deals led by office purchases

MAJOR real estate acquisition deals exceeded 25 billion yuan (US$3.66 billion) in Shanghai last year with office buildings taking nearly four-fifths of total transactions, a leading property services provider said yesterday.

A total of 22 en bloc property deals, valued at a combined 25.6 billion yuan, were concluded in the city in 2009, a year-on-year increase of 42 percent, according to the latest research by Jones Lang LaSalle.

"The city's real estate investment market was dominated by domestic buyers, owner occupiers and the office sector in 2009," said Kurt Jia, national director of investment at Jones Lang LaSalle.

"Notably, domestic buyers represented 88 percent of the transacted value last year, and many of them purchased offices for their own use."

Investors from outside China were notable by their absence from the Shanghai investment market in 2009, completing only one deal - a joint venture between Goodman and the Canada Pension Plan Board which involved the purchase of several industrial assets in Shanghai, the company said.

Meanwhile, purchases by owner occupiers, rare in previous years, accounted for half the city's total investment value in 2009, and office building transactions took a joint share of 79 percent, far exceeding any other real estate sectors such as residential and retail.

For 2010, Jones Lang LaSalle expected the first half to remain active as a total of 6 to 7 billion yuan in deals, covering almost all sectors, are currently in progress and targeted for completion by the end of June.

It also said the proportion of deals done by investors from both home and abroad, rather than owner occupiers, would probably be on the increase this year.

The city's property investment market began to recover in March when Shanghai Lujiazui (Group) Co bought POS Plaza in Pudong for nearly 1.76 billion yuan.


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