Chinese real estate sales surge leaves West behind

China outpaced the US and the UK combined in commercial property sales in the first half of the year, Real Capital Analytics said.

China's transactions totalled US$31.2 billion ($45.6 billion) following a surge in sales of land-development rights after the Government eased credit terms, according to RCA.

US sales were US$16.2 billion in the first half, according to the report, and the UK's were US$13.7 billion.

"There's no question that China will be a more significant player on the world stage for commercial property transactions versus other Western countries," said Dan Fasulo, Real Capital's managing director.

China's growth "may not be sustainable at this level", he said.

About US$62.8 billion of commercial properties were sold during the second quarter, 17 per cent more than in the previous three months and the first increase in 18 months, Real Capital, a New York-based research company, said.

The research firm said sales growth is the first step toward a global recovery. The first half's total sales were US$116.4 billion, 65 per cent less than a year earlier and US$500 billion below the market's peak in the first half of 2007, according to the report.

Countries that receive the most financial support from their governments will recover faster, said RCA.

In China, investors took advantage of looser borrowing terms to buy the rights to develop buildings on state-owned land, Fasulo said. The Government retained ownership of the land, he said.

The amount of office space sold in China rose 13 per cent in the first seven months of this year, while sales of property for commercial uses gained 22 per cent, the National Bureau of Statistics of China said in a recent report.

Sales in the second half may rise as investors believe that "the economy has bottomed out, clearing some of the uncertainty," Lee Hing Yin, Colliers' director of research of East China, said yesterday.

Soho China, the biggest developer in Beijing's central business district, last week said it bought an office and retail development for 2.45 billion yuan ($524 million) that it plans to sell within a month or two.

"Asia's looking the healthiest. They're very optimistic over there, like a young buck," said Ray Torto, Boston-based global chief economist for CB Richard Ellis Group, the world's largest property broker. "You come back to the US and you're talking to an older man."

The slow US recovery reflects the "deep connections of its major institutions to the epicentre of the 2008 financial cataclysm", RCA said. US spending was 6 per cent of the amount spent in the first half of 2007, Fasulo said, compared with China's spending of 92 per cent.

The total volume of properties in default, foreclosure or bankruptcy around the world has reached US$230 billion, increasing US$96 billion in the second quarter, RCA said.

"The growth in transactions is only a first step in the recovery process," according to the report.

"Pricing and operating fundamentals remain in decline and debt remains scarce."

- BLOOMBERG