Guangzhou-Shenzhen property trading twice in two years, Dawan District planning to stimulate foreign investment in the commercial building
Since the development plan for the Guangdong, Hong Kong, Macao and Dawan District (hereinafter referred to as the Dawan District) was formulated in 2017, the interest of overseas institutional investors and real estate funds in investing in Dawan District has increased significantly. According to DTZ’s data, since the initial development plan for Dawan District was proposed in 2017, the property investment market in Guangzhou and Shenzhen (excluding residential and the same below) has become more active. The total transaction volume between Guangzhou and Shenzhen has exceeded 54 billion yuan for two consecutive years (RMB). In the same period, the amount of overseas investors increased by more than two times in 2017 and 2018, respectively, and the amount from overseas investors accounted for 10.2 billion and 5.2 billion yuan respectively in 2017 and 2018, which is more than 36.8 billion in 2016. %. The bank expects that from the next two to three years from 2019, overseas funds are expected to continue to compete for quality investment properties in Guangzhou and Shenzhen, especially in the office market.
Ye Guoping, president of DTZ’s capital market in Greater China and head of China’s capital market, said that since the study and formulation of the Dawan District plan was announced in early 2017, the property investment in Guangzhou and Shenzhen has grown strongly. According to the statistics of DTZ, the total amount of property investment transactions in Guangzhou and Shenzhen in 2016 was only $17.5 billion. However, since the announcement of the Dawan District, it was 57.5 billion yuan and 54.5 billion yuan in 2017 and 2018 respectively, which was 2.3 times higher than that in 2016. 2.1 times. In the first quarter of this year, the amount of investment property transactions between Guangzhou and Shenzhen reached 22.7 billion yuan, more than in 2016.
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Although real estate is not the key to planning in the Greater Bay Area, funds are generally optimistic about the long-term development of the Greater Bay Area to drive new industries and rising incomes of residents, stimulating demand for commercial properties. Investors and developers have steadily increased their investment sentiment in the Greater Bay Area in the past two years, with a focus on Guangzhou and Shenzhen. Both of them are mature in the economic system and close to Hong Kong. The return on investment is good, and the target is to invest in office buildings.
According to Ye Guoping, Guangzhou is a leading trade city in Guangdong Province. Infrastructure, education and medical facilities are among the best in Dawan District. Therefore, many multinational companies have set up their South China headquarters or offices. Shenzhen’s innovation and technology industry is developing rapidly. At the same time, attaching importance to the financial industry, the demand for office leasing in Guangzhou and Shenzhen is huge, driving rental growth [table], and property prices have benefited from appreciation.
Overseas investors are active, spending 7.5 billion in the first quarter
The investment market in Dawan District has become increasingly hot, attracting more and more overseas investors to watch. In 2016, overseas investors purchased investment properties in Guangzhou and Shenzhen for only 3.8 billion yuan. In 2017, they surged to 10.2 billion yuan, about 1.7 times more than in 2016. Although the amount in 2018 fell back to 5.2 billion yuan, it was still 36.38% more than in 2016, including the fund Baring Asia purchased 516 million yuan in the fourth floor of Shenzhen Futian International Chamber of Commerce Center. In the first quarter of this year, overseas investors were once again active. They have spent 7.5 billion yuan to acquire investment properties in Guangzhou and Shenzhen, accounting for 33% of the total 22.7 billion yuan.
According to DTZ’s research data, the cost of Grade A office space in Shenzhen increased from 49,824 yuan per square meter at the end of 2014 (the price of about 5,231 Hong Kong dollars) to 57,325 yuan per square meter in the first quarter of 2019 (the price was about 6018 Hong Kong dollars), an increase of about 15.1%. . In the first quarter of this year, the Grade A office building in Guangzhou recorded 41,663 yuan per square meter (the price was about 4,374 Hong Kong dollars), which was 33.1% higher than the end of 2014, which was 31,298 yuan per square meter (the price was about 3,286 Hong Kong dollars).
Ye Guoping pointed out that the price of Grade A office buildings in Guangzhou is nearly 30% higher than that of Shenzhen, attracting overseas funds that pursue stable rental returns to invest in the Guangzhou office market. As for Shenzhen’s proximity to Hong Kong and the support of a number of innovative technologies, it has a greater impact on capital appreciation. Therefore, both places have overseas funds to pursue. He said: “Before the proportion of overseas funds entering the market was small, because local funds and developers have a strong desire to enter the market, the shots are often more active than overseas funds." At present, the rate of investment in local funds is slowing down, and overseas investors will invest in the next two to three years. Will be further increased. Taking Shanghai as an example, overseas funds account for up to 60% of the total investment amount, and Guangzhou and Shenzhen have the potential to catch up.