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Leopold Chen

More foreign property investors in the Greater Bay Area are likely to sell off assets this year amid lingering uncertainties in the real estate market in mainland China.
Analysts attributed the expected sales to escalating geopolitical tensions and lower investment yields as the area’s commercial property market is plagued with oversupply.
Speculation about China Vanke’s ability to manage its US$4.9 billion onshore and offshore bonds that are maturing or facing redemption this year has also fuelled concerns about the sector.
“It is really challenging for offshore investors to come back this year, unless the return is really high, because of the interest rates and geopolitical issues,” said Charli Chan, a deputy managing director at property broker Cushman and Wakefield.
“So we see offshore investors changing their roles from buyers to sellers.”
The Greater Bay Area refers to Beijing’s initiative to integrate Hong Kong, Macau, and nine cities in Guangdong province into a globally competitive economic powerhouse.
Data from Cushman and Wakefield showed foreign investors were sellers in 8 per cent of transactions in the area in 2022 and 2023. That declined to 6 per cent in 2024.
“I estimate that the data for 2025 will more accurately reflect this trend because many transactions are still ongoing,” she said.
One such recent deal included the sale of two industrial estates in Jiangmen, a city in the bay area scheme, as well as a logistics facility in northwestern Xian. The seller was Hong Kong-based Gaw Capital Partners, the buyer was Chinese insurance giant Ping An and the selling price was more than 2 billion yuan (US$272.9 million), according to property intelligence site Mingtiandi.
The commercial property market in mainland cities in the bay area scheme recorded 66 deals at 100 million yuan or above in 2024, with a total investment of 44.7 billion yuan, down 9 per cent from 2023, according to a report from Cushman and Wakefield released on Tuesday.
Chan cautioned that yields could be limited because of a supply glut and relatively low demand.
“Guangdong is facing a supply boom in the coming year, which may exert pressure on rents,” she said.
Silvia Zeng, head of research at property consultancy JLL in southern China, said foreigners reduced their property investments in Greater Bay Area cities on the mainland in 2024 in part because of higher yields on US dollar assets.
“Foreign investors have also diversified their portfolios from relying on heavy-asset investments,” she said.
“But many of the retail projects run by foreign companies are performing well in the region, and I do not see strong incentives from them to sell off their assets in bulk.”
In a separate report, JLL noted that rents in the nine cities would continue to drop in the near future. The supply of property allotted for office and logistics use is set to increase in 2025 – exceeding demand – and tenants need to control costs, which will drive down rents, it said.
In the residential market, analysts expect a more positive trend in 2025 thanks to government stimulus measures.
The nine mainland cities in the Greater Bay Area, first-hand residential transactions are expected to hit 380,000 units this year, up 20 per cent from a year earlier, Cushman and Wakefield said in a recent report.
Beijing unveiled a number of initiatives late last year to support the country’s sluggish property sector. The residential property market has been more active since October. In the fourth quarter, deals recorded in the nine Greater Bay Area cities on the mainland in the primary residential market rose 42 per cent from a year earlier and 72 per cent from the previous quarter, the firm’s data showed.
But Vanke, whose shares fell 3.3 per cent to HK$4.70 on Friday following rumours that its CEO had been detained, is set to bring more uncertainty.
“The news definitely will further hurt market sentiment in the property market, as Vanke is a household brand in China,” said Raymond Cheng, a managing director at CGS International Securities in Hong Kong.


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More foreign property investors are likely to sell their Greater Bay Area assets in 2025

China property

A China Vanke project in Nanjing. Photo: AFP 

Business

Property

Economy

Analysts attributed the expected sales to escalating geopolitical tensions and lower investment yields


Analysts attributed the expected sales to escalating geopolitical tensions and lower investment yields.
