Foreign buyers are increasingly investing in Chinese commercial property, as Chinese competitors are now hampered by Beijing’s financial deleveraging campaigns. “Overseas investors have always been interested in commercial property in China, especially those in its tier 1 cities. The difference now is that domestic investors are grappling with financing difficulties and rising funding costs, which has given prominence to overseas investors’ activities,” said Xu Xixi, Director of JLL’s Capital Market for North China.

“There are definitely opportunities for cashed-up investors with access to inexpensive capital to take advantage of the current deleveraging taking place throughout China,” said Anthony McQuade, Managing Director of Savills Northern China. Brookfield Asset Management just closed an investment in two shopping malls in Shanghai for an undisclosed price, after announcing earlier this year it would invest CNY2 billion in China in the next five years. In a deal announced on July 9, the property investment arm of Germany’s Allianz bought an office tower in Beijing from Kailong Group and Goldman Sachs valued at USD185-196 million. The company said it expected China to account for 50% of its Asia-Pacific fund allocation going forward from 40% now, with a focus on the new economy and logistics sectors.

US private equity firm Blackstone has raised USD7.1 billion to invest in real estate across Asia, in its largest ever fundraising activity. UK-based AEW Capital Management also announced it had raised USD1.12 billion for an Asia-Pacific property fund that viewed China as a target market. The Singapore sovereign fund GIC and the Canada Pension Plan Investment Board have, respectively, recently launched funds with local developers to acquire rental apartment projects. Savills North China’s McQuade said international investors have been historically underweight in Asia and China, and were now looking for chances to add to their portfolios to better reflect the global weight of economies and property markets, the South China Morning Post reports.

Meanwhile, Shanghai has canceled five planned land sales worth a total of CNY10 billion in 20 days, reflecting the dampened appetite of developers. Chinese developers are facing a liquidity squeeze and rising funding costs as a result of the government’s deleveraging campaign and efforts to rein in housing prices. According to the Shanghai Bureau of Statistics, citywide property investments in the first half grew 3.6%, while new home starts slumped 6.4%. Property sales rose 3%. In Shenzhen, 26 parcels of land were sold in the first half, fetching CNY10.9 billion, down 67% from the same period last year.