Emerging Sectors Are Now Major Property Buyers Buoying China’s Real Estate Market

(Yicai) May 13 -- China’s real estate sector is still in the doldrums, but companies in emerging industries have become active buyers of commercial property, either purchasing buildings directly or acquiring land to develop their own projects.A prime commercial plot in Haitang Bay in Sanya, Hainan province, close to numerous five-star resort hotels, was sold recently for more than CNY680 million (USD94.6 million) to Star Competitive Esports, an operator of esports clubs and related businesses. The firm plans to invest CNY1.4 billion (USD194.7 million) to build a commercial project integrating sports, cultural and tourism facilities.Leading livestream e-commerce operator Wuyou Media acquired a nearby plot at the end of 2024 for more than CNY600 million (USD83.5 million), with plans to develop an international livestreaming base, a global business operations center, and an internet influencer industrial park. E-commerce giant JD.Com purchased a plot of land in Hangzhou last month at a cost of CNY663 million (USD92.2 million), intending to build a regional headquarters as well as a retail center for home appliances and home furnishing products.As well as buying land for their own construction plans, some emerging industrial enterprises opt to purchase existing buildings directly. Zhipu AI, hailed as the world’s first major artificial intelligence developer to go public in Hong Kong, paid over CNY360 million (USD51 million) last month for the Diamond Mansion in Beijing’s Zhongguancun Software Park, a hub for leading technology enterprises.Zhang Xiaoduan, deputy dean of research at real estate services firm Cushman & Wakefield, told Yicai that emerging sectors such as livestream e-commerce and AI are among the fastest-growing industries in China and their stock is much sought-after in the capital market, giving them the financial strength to acquire land, build premises or buy completed buildings.These businesses also have particular space requirements for their office premises, Zhang noted. Large model companies, for example, demand high-density computing power, and developing sites from scratch or purchasing an entire building for customized renovation make it easier to meet such special operational needs.Ai Zhenqiang, chief researcher at Mingyuan Real Estate Research Institute, pointed out that with office property prices in top-tier cities having dropped by 30 percent to 40 percent from peak levels, firms in emerging fields can convert ample cash flow into high-quality assets. This helps boost corporate valuations and financing capacity, while enhancing their ability to withstand changes in economic cycles.Zhang also said that core real estate assets held by companies in emerging sectors can broaden financing channels and attract similar or related enterprises to cluster nearby, fostering a sound industrial ecosystem.Given that emerging industries are still in a period of expansion, Zhang said corporate demand for these land transactions and property leasing is likely to increase.Editors: Tang Shihua, Tom Litting