The world’s largest asset manager BlackRock is selling its last major asset in Shanghai for two-thirds of what it paid, as it beats a retreat from the country’s battered property market.
The US firm is selling Trinity Place, a 27-storey office tower on Changshou Road in Shanghai’s Putuo District for 900 million yuan (US$124 million), according to sources familiar with the matter. The asking price is 34 per cent lower than what it paid in 2017 to acquire what was then called Central Park from Hong Kong Shanghai Alliance Holdings, according to the Post’s calculation based on a stock exchange filing.
Earlier, BlackRock forfeited two office towers in Shanghai’s Waterfront Place business zone after defaulting on a 780 million yuan syndicated loan. The office complex is now being offloaded to DCL Investments, a distressed-assets specialist, for 700 million yuan. This represents a discount of more than 40 per cent from the acquisition price in 2018, according to reports from Bloomberg.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
As the nationwide property slump continues to weigh on returns, BlackRock is not the only investor dialling back its presence in China. Foreign investors were net sellers in the country’s real estate market for a fourth straight year in 2024, buying just US$5.9 billion worth of office, hotel, industrial and retail assets, the lowest level since 2014, according to MSCI.
BlackRock, which recently struck a US$23 billion deal to buy global port assets from Hong Kong’s CK Hutchison Holdings, made no real asset transactions in China over the past five years, according to Cushman & Wakefield data.
“In 2017 and 2018, foreign investments in China’s commercial properties, particularly office buildings, were quite popular,” said Ted Li, senior director and head of capital markets for northern China at Savills. “These assets are now most severely impacted by declining rents and a significant drop in occupancy rates. There is also a decline in the overall value of the assets.”
Many owners are in a rush to sell due to a combination of factors, including the limited investment horizon and rising refinancing costs, even when the overall market is underperforming, he said.
An effort by the Chinese government to deleverage developers starting in late 2020 led to a persistent slump in China’s property sector, slowing the economic growth engine and pressuring rental returns. As businesses continue to struggle with closures and lay-offs, office vacancy rates in China’s major cities have reached a “dangerous” level of 20 per cent and could rise by another 3.2 percentage points this year, consultancy Savills said in February.
Office rents across the country are expected to drop by another 10 per cent this year, property consultancy JLL said in a report on Thursday. An additional 3.5 to 3.9 million square metres (37.7 million to 42 million square feet) of office space is expected to enter the market, compared with a projected net absorption of no more than 2.2 million square metres, JLL said.
BlackRock began its retreat from China some time ago. In December, the asset manager reportedly excluded mainland China and Hong Kong from its sixth Asia property fund, which has a target size of US$1.5 billion and is expected to complete its first close this year, Private Equity International reported in December. This marked the first such exclusion for BlackRock, which said it would still consider office investments, but only selectively.
In December 2023, the company’s Asia-Pacific head of real estate John Saunders, who led the loss-making Trinity Place acquisition, left to join Hong Kong-listed Link Real Estate Investment Trust as chief investment officer. Hamish MacDonald, Saunders’ successor at BlackRock, told Bloomberg in September that the company was “a long way away” from actually investing in China, citing liquidity concerns.
The New York investment firm, which has US$11.6 trillion in assets under management, withdrew its private fund registration in China in 2021 after just three years of operation to focus on its mutual-fund business.
A consortium led by BlackRock announced the blockbuster arrangement to acquire port assets in 23 countries including Panama from CK Hutchison on March 4, but the deal is facing pressure from Beijing.
The top offices overseeing Hong Kong affairs have three times signalled the central government’s unhappiness by reposting on their websites newspaper articles suggesting the deal would hurt national interests. The Post reported on Thursday that tycoon Li Ka-shing’s CK Hutchison and the Hong Kong government were discussing “a reasonable way out” with a week to go until the deadline for the controversial deal.
More from South China Morning Post:
- Diving deep into CK Hutchison’s Panama ports exit
- BlackRock to sell Shanghai office towers acquired for US$167 million in 2018 for 30 per cent discount, sources say
- BlackRock, buyer of Hong Kong Hutchison’s Panama ports, in the eye of the storm
- Global funds exit China’s commercial properties with fourth year of net selling
- China’s office property market outlook bleak as foreign firms leave in droves
For the latest news from the South China Morning Post download our mobile app. Copyright 2025.
