Money

Investors urged to look at commercial real estate

(China Daily)
Updated: 2010-10-25 15:28

At a time when residential property sales have been shrinking because of tough government measures, investors are finding potential in the long-overlooked commercial property market, say industry insiders.

A new survey released by real estate consultancy firm DTZ shows more than 265,000 square meters of A-level office space in Beijing had come onto the market by the third quarter, taking the total overall stock of high quality office space to more than 6. 4 million sq m.

The average cost of renting such space increased by 3.36 percent in the third quarter, to reach 160.5 yuan per sq m per month.

Meanwhile, the sales market for office space was also improving. The average selling price increased from 33,607 yuan per sq m to 34,736 yuan during the same period, a 3.35-percent rise, according to the survey.

Richard C. Wang, head of the North China consulting department of DTZ, said the most expensive offices in the capital are in Oriental Plaza, a 10,000-sq-m business complex in the Wangfujing area that has monthly rents that range from 550 to 2,400 yuan per sq m.

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"The investment potential of office buildings has been underestimated for a long time," Wang said.

Nick J. Cao, associate director of the investment department at DTZ, said Beijing may eventually replace Shanghai as the largest property investment market in China if commercial and office projects in the capital capture investors' attention and become a new "investment focus".

Beijing, which was the first city in the country to put into practice the government's regulations aimed at cooling the residential housing market, now has rules in place that say a family can only buy one new home. The rules came in on May 1. Shanghai followed suit on Oct 7 with the same regulation aimed at curbing speculation.

Pan Shiyi, a commercial property tycoon and chairman of SOHO China, said the government's policies do not impact commercial property sales and rentals. He was speaking during an economic forum sponsored by Phoenix Weekly, a Hong Kong-based magazine.

"During past years, the government has never introduced policies to back up commercial property, but residential housing has enjoyed some preferential policies relating to such things as down payments and mortgage interest rates, so the commercial property market has fewer bubbles in it than the residential market," he said.

Pan said commercial and office property has shown their superiority to investors since the government introduced its policies to curb the residential real estate market.

"The development of commercial property can contribute to a city's economic development and bring more job opportunities," he said.