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China commercial properties woo more foreign investment in Q1

Hong Kong

CHINA'S commercial property sector witnessed a rise in foreign investment in the first quarter, accounting for more than a third of the total inflows into the segment, real estate consultancy Cushman & Wakefield said in a report released on Thursday.

Foreign investment accounted for 35 per cent of the total investment during the period, compared with 31 per cent in 2018, the report said.

Total investment into commercial real estate rose 14.6 per cent in the first three months of 2019 from a year ago to US$12 billion, with office space continuing to remain the most favoured asset class, followed by retail.

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Investments into logistics and co-living sectors also increased during the quarter, it added.

However, there was a drop in leasing activity, as co-working space operators pulled back and many other occupiers sought to reduce occupancy costs, resulting in a 5-year low of net absorption of 474,000 square metres (sq m), compared with 1.4 million sq m a year ago.

"This is creating some enticing investment opportunity at increasingly attractive pricing, though we note an increasing investor preference for stabilised cash-flow generating assets as opposed to product with higher lease-up risk," said James Shepherd, the managing director (Greater China research) at Cushman & Wakefield. REUTERS