Cash-strapped #Developers in China Fuelling Office Property Sale

Desperate to raise cash in order to complete residential projects, developers in China are turning to selling their office properties.

Commercial property transactions in China will see a surge this year, as more developers take to selling their holdings to raise cash in order to complete languishing housing projects. Shanghai and Beijing, two of Asia’s fastest-growing office rental markets, will lead the trend, according to research firms Cushman & Wakefield and Jones Lang LaSalle (JLL).

According to Cushman & Wakefield, sales of office and retail properties in Beijing and Shanghai are set to double in 2012 to hit USD 10.4 billion. Separately, JLL noted a surge of 50% in the number of deals being negotiated in the past six months.

Chinese developers, caught by a two-year-old effort by the central government to bring down housing prices, are seeking to cannibalise their office assets in order to raise the funds needed to complete their residential developments.

"Many Chinese developers today are more willing to sell their office buildings or retail space because they need to access capital for their residential projects," said Jack Ye, Shanghai-based national director of investment at Cushman & Wakefield.

"Selling their profitable commercial properties is easier as it’s only a matter of losing future income if rents continue to rise," he added.

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