Overseas Property Blog :: guide to international real estate investment

SHANGHAI and Beijing office properties are on top of the world – and that’s official.

The two cities led the way with an average eight percent return on investment ratio among the world’s top 12 real estate markets last year, according to a definitive report by a respected international property adviser.

In its inaugural edition of Global Investment View, CB Richard Ellis also said investment in office buildings continued to surge, with Asia and Europe recording the most significant increases in activity.

In particular, Beijing attracted 29.8 billion yuan (US$3.8 billion) in office investment in 2006, as compared to 16.7 billion yuan in 2005.

Shanghai secured 22.6 billion yuan (US$2.8 billion), an increase of 3.2 percent from a year earlier.

A substantial rise in cross-border investment activity was also recorded, as competition among investors, yield compression, and a limited pool of desirable assets have led investors to broaden their geographic search for opportunities.

According to the report, Shanghai led the Asian market with nearly 6.4 billion yuan last year, more than twice the three billion yuan recorded in 2005. American investors were responsible for 2.5 billion yuan, up from two billion yuan a year earlier.

“The increasing volume of global office investment activity over the past five years reflects the abundant institutional and private-investor capital that has been allocated to real estate and the migration of this capital across borders in pursuit of opportunity,” Gregory S. Vorwaller, president of CBRE’s investment properties group, said in the report.

“Diversification across both geography and property types will continue to drive investment portfolio decisions around the world.”

Generally, China’s mainland real estate market, which includes residential, office, hotel, retail and industrial properties, continued to be in the global investment spotlight last year.

Market Office investment Return on volume in 2006 investment rate

Beijing                  US$3.7b      8%

Shanghai              US$2.8b      8%

Toronto                US$1.4b      6.5%

New York              US$23.3b     6.3%

Chicago                US$8.1b       6.3%

Los Angeles          US$8.3b       6%

Sydney                 US$1.8b       5.5%

Singapore             US$2.7b        4.9%

Hong Kong*          US$1.9b        4.5%

Madrid                  US$2.7b        4.25%

Paris                    US$21.2b       4%

London                US$27.6b       3.75%

*Hong Kong investment totals are for the 12-month period December 1, 2005 through November 30, 2006.

Source: Shanghai Daily