China Real Estate Investors See Opportunities in 2014 Downturn

With China’s headlines filled by stories of defaulting developers and falling home prices, some of the world’s largest real estate investors are finding 2014 to be a good year for negotiating property deals in the world’s second-largest economy.

 


In a panel discussion that brought together a group of veteran deal-makers including representatives from CITIC Capital Holdings, CBRE Global Investors, China Resources Capital Management Co., and Grosvenor, China, along with Mingtiandi.com founder Michael Cole, the industry insiders indicated that the current downturn is creating opportunities that may not have been available in 2013.

The slowdown in demand for new housing has created openings for acquiring existing projects, or those already in progress, as well as bringing down land prices.

Downturn Creating Opportunities for Grosvenor

For one UK developer, the slowdown in real estate sales which is pinching many small and local developers is creating chances to buy into or acquire projects which may already be underway.

“We will see a lot of opportunities (this year), because the only opportunities that some developers have to raise cash and save themselves is to sell whatever they have,” said Yang Yu, Managing Director for Investment, Greater China at London-based property developer Grosvenor. “So it does present us with a huge opportunity,” he added.

Before the government shut down bank financing for real estate projects in 2013 to tamp down skyrocketing housing prices, such openings might never have become available.

CBRE Global Investors Likes 2nd Tier Cities

While the market downturn is putting stress on many small and medium sized developers, CBRE Global Investors, which recently raised $470 million to invest in China’s property market sees good opportunities in the country’s second and third-tier city residential markets.

“We believe that residential, fundamentally, is extremely attractive,” said Richard van den Berg, Managing Director and Country Manager for Greater China at CBRE Global Investors. He further explained that, “Price points for land in second and third-tier cities have come down, and we expect still in the next year to one and a half years to come down. Not to that extent that there’s going to be a crash or a major crash, but sufficiently to have a good entry point and low pricing.”

Along with Grosvenor’s Yu and CBRE Global Investors’ Van den Berg, joining Mingtiandi for the panel discussion were Stanley Ching, Senior Managing Director and Head of the Real Estate Group for CITIC Capital Holdings Limited, Hong Kong; and Charade Poon, Director of Investment for China Resources Capital Management.

REIW Asia Conference Held for the 13th Time

This year’s Real Estate Investment World Asia marked the 13th time that the event was held, and the event attracted industry executives from across the region, as well as from Europe, Australia, and North America.

In addition to the members of the China investment panel, among the global companies represented at the event were ARA-CWT Trust Management Ltd, Allen & Overy, Baker & McKenzie, Brookfield, CITIC Capital, City Developments Ltd, Colliers, EC Harris, Fosun, Gaw Capital, GIC Real Estate Private Limited, Hongkong Land Limited, Langham Hospitality Group, Rose Rock Group, Savills, and White Peak Real Estate.

Following up on the Real Estate Investment World Asia appearance, Michael from Mingtiandi will be joining a panel discussion on China’s real estate investment market hosted by Bloomberg in Hong Kong later this week, and is scheduled to appear as a panelist or moderator at a number of additional industry events this year, including Mall China, MIPIM Asia, and Global Real Estate Institute China.

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