Investors flock to high-end properties

08:20, April 08, 2010      

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By Zhao Qian

High-end properties, including commercial and luxury residential real estate, have seen rebound demand, led by rising rentals in Beijing, while institutional investors have become extremely active, a real estate services company said Wednesday.

The Grade A office market saw a significant rebound in leasing activity, with 59,008 square meters of the space being absorbed, excluding self-use, an increase of 30 percent over the previous quarter. And in Beijing's CBD and Third Embassy Area, the net absorptions, excluding self-use space, reached 31,605 square meters and 10,500 square meters, respectively, according to data released by Jones Lang LaSalle (JLL), a financial and professional services company specializing in real estate.

Retail rents increased slightly as demand warmed. "Super markets are expanding aggressively, especially high-end super markets. BHG market place, for instance, opened three stores simultaneously in The Village (South), Global Trade Centre and Landgent Center Mall," the JLL report said.

The luxury residential leasing market also recovered. "Some multinational companies that have been actively developing business in the Chinese mainland increased their numbers of foreign employees, who are the primary leasing group for luxury apartments," the report said.

"We expect prices of luxury properties to continually increase in 2010," said Zhang Hong, head of residential ser-vices at JLL Beijing. "High land costs and inflation forecasts by the government will encourage more people to look into buying luxury apartments as good investment vehicles, causing prices to increase."

In view of the recovery of the market, some overseas institutional investors have adopted different strategies to increase yields.

"Hines, a US-based real estate developer, sold out its Embassy House at Dongzhimen, which it held for a long term, and received attractive yields," Qin Xiaomei, local director of JLL, said at the press release conference.

"The long-term professionally run properties owned by overseas institutional capital created high investment mar-gins in the past few years, and some of the investors exited on a good note this quarter," Qin added.

Other investors purchased several projects in the first quarter with optimistic expectations. Mapletree, a Singaporean company, acquired Gateway Plaza near Sanyuanqiao for around 2.9 billion yuan ($424.85 million). "That is really a good deal, as the property's value will no doubt appreciate," Qin said.

And some landlords, including the owner of the Marriott Executive Apartments Palm Springs, Beijing Century Sun Real Estate Development Co, sold serviced apartments as individual units, as capital values continued to increase at a rapid pace.

Source: Global Times


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