Investment Market Driven by SOEs and Private Investors, Logistics Sector to Remain the Focus

• The central government's introduction of the supportive "517" policy in May 2024 prompted Greater Bay Area (GBA) cities to implement a range of relaxation measures, in turn spurring housing market activity, with primary market home sales rebounding in June
• Total investment volume in the GBA commercial real estate (CRE) market reached RMB11.9 billion in 1H 2024, accounting for 17% of total Chinese mainland CRE investment volume in the period
• The GBA investment market was driven by state-owned enterprises and private investors in 1H 2024, with the logistics sector likely to remain sought-after due to capital appreciation potential

HONG KONG SAR - Media OutReach Newswire - 23 July 2024 - Global real estate services firm Cushman & Wakefield today published its Greater Bay Area Residential and Investment Market 1H 2024 Review and Outlook. GBA primary market residential sales slowed in 1H 2024 compared to the same period last year, under the continuing global high interest rate environment. However, market sentiment strengthened following the introduction of supportive housing policies in May. The CRE investment market (large-sized deals at >RMB100 million) was primarily driven by state-owned enterprises and mainland investors. Looking ahead, the central government stated at the Third Plenary Session in July 2024 that municipal governments will be granted greater decision-making authority to regulate the real estate market. This is expected to bring greater momentum to the market, thereby supporting a recovery in residential transactions and price stabilization in 2H 2024. The central government stated at the Session that it will lift restrictions on the market, while also ensuring effective regulation, as well as leveraging the market's role by fostering a fairer environment for private enterprises and foreign companies to participate in economic and industry development. We can expect this to bring greater market vitality and to benefit the property market in the long run. In the investment market, we can anticipate that investors will continue to pay attention to the logistics sector, given the sector's strong demand and stable rental returns. GBA Residential Market The GBA primary residential market recorded approximately 133,000 transactions in the 1H 2024 period. This performance was down 15% h-o-h and 40% y-o-y, in part due to the relatively high base of comparison from 1H 2023 amid the impetus of the border reopening. However, the central government's implementation of the "517" new housing policies in mid-May — including the cancellation of the new home loan rate lower limit, lowering of the individual housing provident fund loan rates, and the adjustment of the minimum down- payment ratio — helped to bolster sentiment in the market. In turn, primary residential transactions grew by 19% in June over the prior month to nearly 29,000 units, higher than the average monthly transaction volume in 2H 2023 and reflecting solid end-user demand in the GBA residential market. Alva To, Cushman & Wakefield's Vice President, Greater China & Head of Consulting, Greater China said, "At the recent Third Plenary Session, the central government granted greater decision-making power to municipal governments to regulate the real estate market, and proposed a series of measures to boost the economy, including the intention to lift restrictions on the market while ensuring effective regulation and to relax different economic control measures. Coupled with the earlier implementation of the "517" supportive housing policy, we believe that GBA residential transaction volume will gradually expand in 2H 2024. We expect average monthly transaction numbers in 2H 2024 to reach around 28,000 to 30,000 units, potentially bringing the 2024 total annual first-hand residential transactions to 300,000 to 313,000 units, a drop of 17% to 20% y-o-y, with the decline front-loaded in 1H 2024. "On the other hand, connectivity between GBA cities has been greatly strengthened given the ongoing improvement in the transportation network in recent years, including the high-speed rail, Hong Kong-Zhuhai-Macao Bridge and Shenzhen Zhongshan Passage. This will help drive more Hong Kong and Macao residents to buy properties in GBA cities. Housing price differences between Hong Kong and mainland cities also make GBA properties attractive to some Hong Kong people, especially for those who find Hong Kong purchase entry prices too high. Furthermore, the Chinese mainland has recently introduced guidelines to facilitate Hong Kong and Macao residents to take domestic mortgage loans for GBA properties, with RMB funds remitted for mortgage loan payments exempted from the remittance limit. As Hong Kong continues to integrate with the GBA, we expect to see increasing buying interest from Hong Kong residents, supporting a...