GRA Market Weekly (2026-06-26)

Policy Watch

Guangzhou issues Implementation Opinions on Upgrading Under-performing Buildings

On 22 June 2026, the Guangzhou Housing and Urban-Rural Development Bureau and the Guangzhou Planning and Natural Resources Bureau released the Implementation Opinions on Promoting the Renewal and Upgrading of Under-performing Buildings, supporting the conversion of under-performing commercial and office buildings with high vacancy and aging facilities into affordable rental housing, hotels, elderly care, science and innovation uses and more. The policy establishes a transitional use period of up to 15 years (including extensions) with a subsequent paid-use pathway; properties with ownership registered for over five years that meet the criteria enjoy a five-year transition exempt from annual land revenue payments; certain planning indicators may be controlled at no less than post-conversion status-quo levels; an innovative fire-safety assurance scheme may substitute for current fire codes as the basis for occupancy; added fire stairs, elevators and similar facilities are excluded from plot-ratio calculations; lease terms for renewed SOE-owned properties may extend to 20 years; and legal commercial properties on collective land may apply the rules by reference. Near term, the policy gives Guangzhou's existing commercial stock a workable approval pathway and eases cash-flow pressure on vacant offices; over the medium to long term, the institutionalised "under-performing building to affordable rental housing/hotel" conversion channel - with the 15-year transition and fire-code alternative substantially lowering compliance hurdles - offers a national template for revitalising commercial stock.

Market Watch

Poly Developments takes a Bao'an Central residential plot in Shenzhen for RMB 10.51 bn

On 25 June, Shenzhen held its final residential land auction of the first half. The sale featured a single prime residential plot in Bao'an Central District; four bidders battled for an hour and a half through 355 rounds before Poly Developments secured the plot for RMB 10.51 bn, at an accommodation value of RMB 87,924/sqm and a 99.05% premium. Plot A002-0113, on the southwest side of the Haixiu Road/Jinke Road junction in Xin'an Sub-district, Bao'an District, is zoned Class II residential, with a site area of 37,357.23 sqm, planned GFA of 119,535.00 sqm and a plot ratio of 3.2; the starting price was RMB 5.280 bn, or RMB 44,171/sqm. The plot drew four bidders - a China Resources Land & China Merchants Shekou consortium, Poly Developments, C&D and China Overseas - through 355 rounds (4 rounds of open bidding plus 351 offline rounds), with Shenzhen Poly Industrial Investment Co., Ltd. (Poly Developments) ultimately winning at RMB 10.510 bn, RMB 87,924/sqm and a 99.05% premium. The price ranks among the top three accommodation values ever paid for residential-use land in Shenzhen and sets a new per-sqm record for Bao'an District.

Xiamen sells six residential plots in one sitting, all clearing for a combined RMB 7.039 bn

On 24 June, Xiamen publicly granted six state-owned construction land-use rights with a combined area of 18.79 hectares, transacting for a total of RMB 7.039 bn. The auction offered six residential-use plots across Siming, Huli, Jimei and Xiang'an, all successfully sold to leading central and local SOEs and consortia including ITG, Xiangyu and Lianfa. With local SOEs backstopping the auction and private developers collectively absent, the results reflect developers' cautious land acquisition stance and highlight structural divergence in the market.

Second batch of commercial real estate REITs approved: six products targeting over RMB 13 bn

On 22-23 June, the CSRC approved in succession the ChinaAMC CapitaLand Commercial REIT, ChinaAMC Poly Developments Commercial REIT, Hua An Lujiazui Commercial REIT, Chuangjin Hexin Beijing State-owned Assets Commercial REIT, Hua An Jin Jiang Commercial REIT and Everbright PGIM EBA Investments Commercial REIT - six products targeting more than RMB 13 bn in aggregate. The ChinaAMC CapitaLand Commercial REIT targets RMB 3.873 bn (underlying valuation RMB 4.811 bn), the Chuangjin Hexin Beijing State-owned Assets Commercial REIT RMB 2.575 bn (valuation RMB 2.569 bn), and the Hua An Lujiazui Commercial REIT RMB 2.574 bn. Only two trading days separated the first batch's listing from the second batch's approval - a marked acceleration in the approval cadence; market appetite is clearly divided, with retail/outlet assets drawing far stronger subscriptions than office assets.

Project Watch

Shanghai's Gubei CBD launches large-scale conversion of existing buildings, with three initial projects unlocking over 100,000 sqm of commercial space

Shanghai's Gubei CBD is undergoing a large-scale functional conversion of existing buildings, with the first three projects together unlocking more than 100,000 sqm of commercial and office space. The Antai Building at 107 Zunyi Road has begun a whole-building conversion into long-term rental apartments; the Wandu Center at 8 Xingyi Road plans to convert floors 36-54 into long-term rental apartments, covering c. 36,000 sqm; and the Sunshine New Industry Center at 888 Zhongshan West Road has obtained rental-housing pre-qualification, allowing conversion into a hotel and long-term rental apartments.

Corporate Watch

Shimao Group: twin Tung Chung hotels in Hong Kong placed in receivership by lending syndicate, with a global tender launched

On 24 June, Shimao Group announced on the Hong Kong Stock Exchange that its two hotel properties - the Sheraton Hong Kong Tung Chung Hotel and the Four Points by Sheraton Hong Kong Tung Chung - had been placed under receivers appointed by a lending syndicate effective 1 June 2026, with an external sale process launched simultaneously, another landmark asset disposal in Shimao's debt workout. The company's latest annual report and monthly sales data show operations have returned to net profit, but sales remain subdued and pressure to clear debt and assets has not fully eased. The two Tung Chung hotels are among Shimao's top revenue-generating "cash cow" hotels, with combined 2025 net profit of nearly HKD 500 m per the annual report. These cash cows face receivership and sale because Shimao pledged them against a HKD 4.5 bn syndicated loan it can no longer service. The indicative asking price is c. HKD 3 bn (c. RMB 2.79 bn at HKD 1 ≈ RMB 0.93), a 33% discount to the HKD 4.5 bn outstanding principal; the assets were listed at HKD 6.5 bn in 2023 and cut to HKD 4.5 bn by end-2024 without finding a buyer.

Overseas Watch

Tokyo office rents keep climbing while J-REIT spreads come under pressure

On 23 June, Sumitomo Mitsui Trust released its J-REIT property price index and cap-rate data; on 25 June, Sina Finance published an analysis of J-REIT debt refinancing. Vacancy across Tokyo's five central wards stood at 2.22% in March, with average asking rents up for 26 consecutive months to JPY 22,302 per tsubo per month (+1.5%). Sanko Estate's Q1 data put Class A office rents in central Tokyo at JPY 37,620 (+6.0% QoQ), up for ten consecutive periods, with vacancy at 0.9%; JRE (8952.T) projects annual rent growth of c. 10% over the next 1-2 years. However, with the Bank of Japan's policy rate in the 0.75% range, office J-REIT cap rates have risen c. 35 bps since end-2023, offsetting the benefit of 7% NOI growth and leaving office property prices flat for nearly two years.