Chinese purchases of U.S. residential property hit a record high of USD31.7 billion in 2016, up at least USD4 billion, according to the country’s National Association of Realtors (NAR). Its 2017 Profile of International Activity in U.S. Residential Real Estate, found that between April 2016 and March 2017, China maintained its top position in terms of dollar sales for the fourth straight year. The figure of USD31.7 billion is up from last year’s USD27.3 billion but down slightly on 2015’s USD28.6 billion. Chinese buyers also bought the most housing units for the third consecutive year, 40,572, up from 29,195 in 2016. NAR found that among Chinese buyers, 65% paid cash, while 26% used a U.S. mortgage. 21% bought property as an investment, while 39% planned to use the purchase as either a vacation or residential investment, while 8% was bought as student accommodation. The study also showed that 31% bought properties in central city or urban areas, but suburban purchases (61%) were the most popular, with small town buys at just 7%. 67% of the purchases were detached single-family homes, 14% were townhouses, and condominiums accounted for 13% of sales. Sue Jong, Chief of Operations at Juwai.com, a property portal, said that this year’s international real estate investment will be down at least 10% from 2016, the South China Morning Post reports. Surprisingly, despite the fast pace of overseas acquisitions in recent years, China still lags compared with other economies. China ranks just 18th in the world by aggregate ownership of foreign real estate and other assets compared to gross domestic product (GDP), at just 12%, well below the average of 42%, according to the Organization for Economic Cooperation and Development (OECD).

Rents for top-grade office spaces in Beijing’s key areas are still increasing, which could force prospective as well as existing tenants to look for cheaper alternatives in other areas, industry analysts said. According to Jones Lang Lasalle (JLL), popular locations in Beijing for Grade A office spaces include the Central Business District (CBD), Olympic Park, Wangjing and East Chang An Avenue. They have seen four new Grade A projects that added 2.7 million square meters to the capital’s office space supply in the second quarter, taking the total to 102 million sq m. Ping An Trust Co has bought a shopping mall in northeast Beijing for CNY1.25 billion in April. According to JLL, Ping An Trust may convert the mall into an office complex, potentially adding 1 million sq m more of gross floor area to the market. If more tenants relocate to suburban areas, such as the Olympic Park, high rents in the CBD may drop significantly, JLL said in a research note. “Some 78% of newly added offices have been rented out already in the second quarter,” said Zhang Ying, General Manager of JLL. Savills predicts that supplies will grow by 3.37 million sq m in the second half of this year. The boom in supply could well leave about 8% of the overall office space vacant. Although the emerging markets may drive down rents in prime locations, the average rent of top-grade office space in Beijing is expected to stay stable. Rents in Zhongguancun have increased by 13.8% year-on-year in the second quarter as the country pushes through the Made in China 2025 strategy, attracting more companies and research institutions to move in to the tech hub, the China Daily reports.

The Beijing municipal government said that it won’t allow new residential projects to go on sale if prices are higher than those sold earlier, to prevent developers raising prices. In March, Mayor Cai Qi had vowed “no home price rise” this year from levels in 2016, asserting that the city must be firm in stamping out speculative investment. Since then, an unofficial price ceiling of CNY80,000 per square meter has been in place, and so far no new projects have been granted a presale permit for prices above CNY80,000 per sq m. A common sales tactic has been for a phased release of units within an apartment project, raising selling prices over time, but the new rules aim to prevent this. Under the price control system, Beijing’s new home price growth eased to 14.6% in May from 27% in January. Property sales measured in floor space declined 26.8% in the first five months from the year-earlier period, while new starts in the same period slumped 43.7%. Prices in the secondary home market, which accounts for more than 80% of the city’s transaction volume, also cooled sharply. Weekly sales have fallen below 2,000 units for six straight weeks, compared to its peak of 8,769 units in March, according to Centaline Property. To curb prices, the white paper of the Beijing municipal government also vowed to increase residential land supply, designate more plots for affordable home building, and build more public rental homes. In the first half, 46 plots were sold in Beijing with a total price of CNY100.6 billion, exceeding the CNY85.2 billion raised through the sale of 44 plots in the full year of 2016, the South China Morning Post reports.

Stricter capital controls introduced by Beijing last November have cut investment demand by mainland Chinese investors in Hong Kong by four times, according to real estate management company Jones Lang LaSalle. Mainland investors accounted for only 7.6% of the total investment volume in Hong Kong’s office sector in the first half of the year, compared to 31% in 2016, said Denis Ma, head of research at JLL. The total number of commercial property transactions valued at over HKD100 million surged by 51% year-on-year in the first half, but the total investment volume was down 12.7% year-on-year. The office sector continued to attract the most investment, accounting for 53% of the total commercial investment volume, while retail and industrial accounted for 25% and 22%, respectively. The office sector recorded the strongest performance within the commercial and retail sector. Prices for Grade A offices grew 15.1% in the first half, according to JLL. The office market in Central saw capital values surge after the sale of the Murray Road car park site for a record average value of HKD50,056 per square feet. Capital values of high street shops, however, continued to fall, down 7% in the first half. JLL said that the current spread between interest rates and property yields provides a buffer against rising interest rates. “All in all, we expect capital values of Grade A offices and warehouses to go up in the range of 15% to 20% and 5% to 10% respectively in 2017, while those of high street shops to correct 5% to 10%,” Ma added.

China’s top 10 real estate developers jointly contributed 26.6% of the country’s total sales value of CNY5.84 trillion in the first half, 8 percentage points more than last year, according to CRIC, a subsidiary of E-House China Holdings. In terms of sales by area, they accounted for 15.8% of the total, up from 12.5% a year earlier. By sales value, the threshold for making it into the top 10 rose 40% from the same period a year ago to CNY70.2 billion. Country Garden, China Vanke Co and Evergrande Group were the top three, with first-half sales all exceeding CNY200 billion. Poly Real Estate, Greenland Group, Sunac China and China Overseas Property trailed closely, each with sales of more than CNY100 billion, according to a separate report by the China Index Academy. Average property sales by the seven developers with more than CNY100 billion in sales reached CNY184.8 billion, a year-on-year surge of 39.3%. That compared to the annual rise of 2.5% for developers with sales of CNY50 billion to CNY100 billion, a 7.44% increase by developers with sales between CNY20 billion and CNY50 billion, the 2.8% gain by developers with sales between CNY5 billion and CNY10 billion, and a 4.8% decline for companies with sales of CNY10 billion to CNY20 billion, the Shanghai Daily reports.