Greater Bay Area Initiative to Propel Real Estate Investment into Guangzhou and Shenzhen to New Highs

• A strong
  pick-up in investment interest in the GBA with interest narrowly focusing in
  Guangzhou and Shenzhen since the announcement of the initiative in 2017
• Combined
  transaction volume in Guangzhou and Shenzhen amounted to a second record high
  of RMB 54.6 billion in 2018
• Foreign
  real estate investment has more than doubled to RMB 5.2 billion in 2018, from
  RMB 2.2 billion in 2014. �

HONG KONG, CHINA - Media OutReach – 5 June 2019 - A rising tide of
real estate investment into Guangzhou and Shenzhen is being fueled by the Guangdong-Hong
Kong-Macao Greater Bay Area (GBA) initiative according to Promise and Potential: Real
Estate Investment Trends in the Greater Bay Area ,
a recently released report by Cushman & Wakefield.

Nearly two years after the initial announcement of an
ambitious plan to transform the GBA, consisting of nine Guangdong Province
cities and two Special Administrative Regions (Hong Kong and Macao) into a
global economic powerhouse, the Central Government followed through in formally
releasing a blueprint for the region in February 2019. While the blueprint did
not offer much in the way of new details, it was nonetheless welcomed as a
signal of the government’s continued commitment to drive economic growth in the
area. And despite the lengthy wait for the blueprint, investor and developer
interest in the region has steadily grown in the past two years since the
initial announcement. 

While real estate is not a key feature of the
GBA plan, its successful implementation clearly has major implications for the
sector, from the creation of commercial nodes supported by new transportation
links to growing commercial demand supported by new industries and rising incomes.

The growth potential
in the GBA has resulted in a strong pick-up in investment interest in the area
in the period since the announcement of the initiative in early 2017. However,
that interest has been narrowly focused in Guangzhou and Shenzhen given the
maturity of their economies, close proximity to Hong Kong and the presence of
high-quality commercial assets. In 2018 alone, combined transaction volume in
the two cities amounted to RMB 54.6 billion, the second highest on record
(after RMB 57.5 billion in 2017) and more than three times the RMB 17.5 billion
recorded in 2016, prior to the announcement of the initiative

Real Estate
Investment in Guangzhou and Shenzhen

As the investment
market in the GBA has heated up, it has attracted a growing number of foreign
investors. Since 2014, investment into properties valued at more than RMB 100
million each by foreign investors in Guangzhou and Shenzhen has more than
doubled to RMB 5.2 billion in 2018, from RMB 2.2 billion in 2014.

Mr
Reed Hatcher, Director and Head of Research, Hong Kong at Cushman &
Wakefield, commented, “Improving inter-city transport
connectivity, along with strong underlying fundamentals in Guangzhou and Shenzhen
and growth prospects arising from the ambitious GBA initiative, has attracted a
number of Hong Kong and foreign PERE funds looking for suitable real estate
opportunities in the two Tier-1 cities.”

The strong investment
demand from foreign investors seen in 2018 continued into the first quarter of
2019 with the combined foreign consideration in the two cities amounting to RMB
7.5 billion, about a little over half of the record high in 2012.

Among all asset
classes, office and retail properties are unsurprisingly the two most sought
after by foreign investors, accounting for 40% and 25%, respectively, of the
total number of foreign transactions over the past 10 years.

This report also
examined and identified respective opportunities in the two Tier-1 cities based
on three investment strategies, namely Core/Core-Plus, Value-Added and
Opportunistic. Looking ahead, investment activity from foreign investors is
expected to increase further, competing directly with domestic players — who
have been a dominant force on their home turf — for suitable commercial
investment properties.

Potential
Opportunities by Investment Strategies in Guangzhou and Shenzhen

Mr
Alvin Yip, Cushman & Wakefield’s President of Capital Markets, Greater
China and Head of Capital Markets, China, said, “We expect to
see more foreign PERE funds to enter the investment markets of Guangzhou and
Shenzhen given their strong economic fundamentals and proximity to Hong Kong.
Competition are likely to intensify as both foreign and domestic players are
scrambling for investment opportunities especially within the commercial asset
classes.”

For investors and
developers who are interested in investing in the two Tier-1 cities, Cushman
& Wakefield recommends an early evaluation of the current opportunities and
implementation of appropriate real estate strategies.

Click here for the full report.

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is a leading global
real estate services firm that delivers exceptional value for real estate
occupiers and owners. Cushman & Wakefield is among the largest real estate
services firms with 51,000 employees in approximately 400 offices and 70
countries. Across Greater China, there are 21 offices servicing the local
market. The company won four of the top awards in the Euromoney Survey 2017
& 2018 in the categories of Overall, Agency Letting/Sales, Valuation and
Research in China. In 2018, the firm had revenue of $8.2 billion across core
services of property, facilities and project management, leasing, capital
markets, advisory and other services. To learn more, visit www.cushmanwakefield.com.hk or follow us on LinkedIn
(https://www.linkedin.com/company/cushman-&-wakefield-greater-china)