BLACKROCK is seeking to sell an office complex in Shanghai at about a 30 per cent discount to its purchase price, people with knowledge of the matter said, reflecting the sluggish commercial property market in China’s biggest city.

The New York-based asset manager is marketing the property in northwestern Shanghai at a reduced rate to speed up the sale, according to the people, who asked not to be identified because the information is private.

A representative for BlackRock declined to comment.

BlackRock bought two towers at Waterfront Place from PGIM Real Estate for a reported 1.2 billion yuan (S$224 million) in 2018. They have a total area of 27,805 square metres of office space in Chang Feng, a decentralised business district.

Finding a buyer in China’s current commercial property market may be difficult, with other institutional investors offloading offices as the weak economy and oversupply weigh on the sector. Falling rents and a global trend to reduce exposure to office assets make such properties less appealing to potential investors.

In Shanghai, office rents fell to the lowest in almost a decade last quarter, and they may decline further this year due to a growing supply pipeline, according to Colliers International Group.

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Prime offices in Beijing and Shanghai traded at capitalisation rates of about 5 per cent last quarter, the highest in more than a decade, Colliers data show.

A rise in the cap rate, which is a property’s net income divided by the transaction price, usually signals a decline in real estate values.

BlackRock invested in commercial real estate projects in China less than a decade ago when it sought more exposure to offices and malls in first-tier and second-tier cities.

In 2017, it reportedly purchased an office tower in the city centre for 1.37 billion yuan, and the next year it bought the two blocks in Waterfront Place in the same area. BLOOMBERG