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New En-bloc transaction in ZGC indicating the shift of commercial real estate investment trend towards value-add opportunities

Recently, Jinmao, Beijing Capital Development Holding and Gohigh Fund jointly set up the special purpose fund to acquire Block D of Tuspark (启迪科技大厦), in Zhongguancun (ZGC) submarket, Haidian District, Beijing. After the acquisition, the investors intend to renovate and upgrade the property to realize the capital value appreciation and exit via En-bloc transaction or asset securitization at the right time.

Colliers International Valuation and Advisory Services commented:

In 2020, numerous industries in China were affected by the outbreak of COVID-19. Beijing’s office market also faced pressure from increasing vacancy and decreasing rental level. In comparison, the IT industry has highlighted its resilience. As one of the major office submarkets in Beijing, ZGC (中关村) accommodates many high-tech industrial leaders. Thanks to the rapid development of the industry and the clustering effect, the overall leasing performance in ZGC has been stable. In March, Jinmao, Beijing Capital Development Holding and Gohigh Fund jointly purchased block D of Tuspark (启迪科技大厦), the landmark office building in east ZGC, reflecting the investors’ interest in the submarket. Considering the lack of new supply in ZGC in the foreseeable future, the investors are shifting their investment focus towards urban renewal projects. Through upgrading or renovating the existing properties, investors shall achieve financial gains with growing rental and the appreciation of the property’s value.