“In the current market, value is created through operations, not optimism. Assets that can be run well will outperform, regardless of headline sentiment.” —— James Macdonald, Savills Research

Capital Repricing and Realignment

• In the 12 months to 15 December 2025, China’s en-bloc investment market recorded provisional transaction volumes of RMB224.6 billion, down 16.7% YoY.

• Activity levels diverged by sector: Residential / rental apartments rose +12.4%, while office, retail, and industrial & logistics all declined YoY.

• Tier 1 cities’ share fell further to 47%, signalling a broader national repricing: capital is dispersing towards key Tier 2 cities and specific industry hubs.

• Policies supporting the issuance of REITs for consumer infrastructure have provided a clear path for the renovation and value reassessment of existing commercial assets. However, policy benefits will be highly differentiated, ultimately favouring participants with refined operational capabilities.

• Financial institutions are becoming more important. They are using structured deals and partnership models that combine long-term capital, specialist operators, fund management and planned exits. A key force in revitalizing existing assets and reshaping value.

• Developer financing remains challenging, although conditions have improved marginally, with bond issuance picking up and ABS and REIT activity rising on a YoY basis. This is helping the market shift from development-driven funding to operations-driven funding.