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Foreign investors on record China property spree

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CapitaLand and GIC splashed out US$1.8 billion on Shanghai's tallest twin towers in 2018.

Shanghai

FOREIGN investors are increasing their presence in China's commercial real estate market, taking advantage of the deleveraging drive that is squeezing the nation's companies.

Overseas firms may be set to sustain a resurgence that last year sent their purchases to a record US$9 billion nationwide and accounted for just over half of all sales in Shanghai.

Blackstone Group and Singaporean developer CapitaLand are among those leading the charge. CapitaLand and Singapore sovereign wealth fund GIC splashed out US$1.8 billion on Shanghai's tallest twin towers in the biggest purchase of 2018.

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The upswing comes just as some of China's biggest private conglomerates - like embattled HNA Group - are unwinding overseas property buying binges. In some cases, they are also selling domestic real estate.Offshore buyers are aided by a weak yuan that makes purchases cheaper and tight financial conditions that mean many Chinese companies are more likely to be sellers than purchasers.

The financial firepower on tap for foreigners includes the US$15.6 billion raised for Asian property private equity funds last year, according to market research firm Preqin. Overseas firms bought 31 per cent of commercial property nationwide last year, based on CBRE data for deals of US$10 million and above.

They may account for as much as 40 per cent of sales in Shanghai and Beijing combined in 2019, according to Colliers International Group. Local firms face constraints including rule changes in late 2017 that made it harder for property private equity funds to raise money.

Cities such as Hangzhou, Nanjing and Wuhan are also attracting interest on the prospect of rising yields, according to Sam Xie, CBRE Group's head of research in China. BLOOMBERG