“Alongside policy support for traditional occupiers, a new source of demand is emerging from more client-facing uses of office space. While this remains relatively limited in scale, it is helping support leasing activity in selected buildings.” —— James Macdonald, RESEARCH



Domestic Capital Underpins Activity

•A total of 21 en-bloc transactions were completed in Q1/2026, with a combined value of RMB11.02 billion, down 20% YoY but up 16% QoQ. Overall activity remained subdued, with transaction value supported by several large-scale office and hotel deals.

•Domestic investors remained the primary buyers of core assets, while foreign financial investors stayed on the sidelines. Corporate buyers are increasingly shaping pricing for incremental demand.

•Shui On Land sold a controlling stake in Corporate Avenue 5 and Hu Bin Dao to an insurance consortium for RMB5.99 billion, while retaining operational control, providing another example of an asset-light approach.

•Transaction prices for core assets such as Ciros Plaza and Bank of East Asia Financial Building were well below replacement cost and historical peaks. This creates opportunities for owner-occupiers to acquire assets at reduced capital values, while offering a degree of downside protection for long-term investors.

•In a low-interest-rate environment, assets with stable cash flow and policy support are becoming a key focus for insurers’ long-term allocation.

•Land sale revenue declined by around 30% YoY in Q1/2026, with the average premium rate falling to a four-year low. The residential land market remains clearly divided, with stronger demand in inner areas and weaker demand in outer districts.