China’s office property market outlook bleak as foreign firms leave in droves

Downward pressure on China’s office property market is likely to persist this year, while an exodus of foreign companies due to rising tensions between the world’s two largest economies further complicates the outlook.

US law firm Cleary Gottlieb Steen & Hamilton this week became one of the latest companies to pull out of China, saying that it would close its office in Fortune Financial Center in Beijing’s bustling central business district in July.

Last week, a BlackRock fund forfeited two office towers at Waterfront Place in Shanghai’s premier Lujiazui financial district to Standard Chartered after failing to repay a US$780 million loan that was rolled over for more than a year. The world’s largest asset manager could not find a buyer even after offering a 30 per cent discount.

Cleary Gottlieb and BlackRock are just two among many international companies dialling back their presence in China as trade tensions escalate with the US and opportunities dwindle amid the nation’s slowing economic growth.

“For multinationals in general, [the retreat] is a result of multiple factors, [and] chief among them is their profitability,” said Guo Shan, a partner at Hutong Research, an independent advisory firm for multinational companies in China.

  

​Read More