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China

Institutional investors will continue to seek core stabilised assets in major China cities

Latest figures from JLL shows that China transaction volumes in Q1 2016 were 10 percent ahead of the same period last year


​SHANGHAI, April 26, 2016 –  According to JLL’s latest global capital flows data, Asia Pacific’s real estate transaction volumes in the first quarter of 2016 fell 5 percent from the same period a year earlier to US$23.7 billion as weakness in Japan outweighed gains in Hong Kong, Australia and South Korea. Volumes in Japan, the region’s biggest market, dropped 26 percent year-on-year but climbed 65 percent quarter-on-quarter to US$9.6 billion.

China recorded US$2.8 billion worth of transaction volumes, up 10% y-o-y, but significantly lower q-o-q after a record 4Q15. The result was partly due to a lack of willing sellers and as the real estate investment market increasingly became more polarised between Tier-1 and Tier-2 cities. 

“The large price gap between buyers' & sellers' expectation resulted in a scarcity of assets. However, a number of deals are currently under negotiation. Institutional investors will continue to seek core stabilised assets in major cities, which are scarce to come by given strong rental growth and after a record year of investment in 2015,” said Anthony Couse, Head of Capital Markets for JLL China. “Looking ahead, there may be more diversity of transactions as opportunistic investors seen likely to look for assets in other asset classes or distressed assets in secondary markets.”

Investment activity in Hong Kong, more than doubled y-o-y to US$2.9 billion in 1Q16 on the back of two major transactions. Investment appetite by Chinese investors showed no signs of abating after setting record transaction pricing in 2015. China Everbright bought Dah Sing Financial Centre for about US$1.3 billion in 1Q16. However, investment activity was noticeably subdued elsewhere in the market and secondary home sales came to a standstill in 1Q16 due to the ongoing housing market correction. More assets should come to market, as current high pricing level may prompt developers to be opportunistic by locking in profits and sell non-core assets to shore up balance sheet.

In light of global economic uncertainty, Asian investors preferred markets closer to home. This was evidenced by the jump in capital flows between countries within the region. Intra-regional buyer transaction volume rose to US$4 billion in the first three months of this year from US$1.1 billion the same period a year ago. 

“The fact that more Asian investors have chosen to put their money within the region is indicative of a shift in global investment trends as the region moves towards a more aggressive expansionary monetary policy mode,” says Megan Walters, Head of Asia Pacific Capital Markets research. “Going forward, we could see more Asian capital staying within the region as a divide in global monetary policy continues with the US moving on to a restrictive policy approach.”

Notes to Editors 

1. Reported data only refers to direct commercial property transactions (including hotels) but excludes entity level and residential transactions 

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About JLL

JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. A Fortune 500 company with annual fee revenue of $5.2 billion and gross revenue of $6.0 billion, JLL has more than 230 corporate offices, operates in more than 80 countries and has a global workforce of more than 60,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 4.0 billion square feet, or 372 million square meters, and completed $138 billion in sales, acquisitions and finance transactions in 2015. Its investment management business, LaSalle Investment Management, has $56.4 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit   www.jll.com

JLL has over 50 years of experience in Asia Pacific, with over 32,000 employees operating in 83 offices in 16 countries across the region. The firm was named ‘Best International Property Consultancy’ and ‘Best Property Consultancy Asia Pacific’ at the International Property Awards Final 2015 as well as number one real estate advisor in Asia at the 2015 Euromoney Real Estate Awards. www.jll.com/asiapacific  

In Greater China, the firm was named ‘Best Property Consultancy in China’ at the International Property Awards Asia Pacific 2015, and has more than 2,200 professionals and 14,000 on-site staff providing quality real estate advice and services in over 80 cities across the country.  www.joneslanglasalle.com.cn​​​​