Potential to capitalise: Shanghai’s urban regeneration plans hold promise for repositioning assets
Pamfleet began exploring the possibility of investing in Shanghai in 2014, with the intention of deploying a bottom-up approach of buying older, underperforming properties for repositioning. The firm spent two years determining how to source, structure and finance deals before it closed its first acquisition. Five years on, with value-added projects completed, many lessons have been learnt, some of which are shared in this article.
The investment market
Shanghai has an active investment market, with many whole-building transactions each year. Brokers are understandably keen to steer buyers towards the deals that are easiest to close, which often results in foreign investors trading amongst themselves. In 2018, Savills found foreign buyers spent 54.5 billion yuan (US$7.8 billion) in Shanghai, representing 55 percent of the total transaction volume. Tighter credit conditions, the impact of the trade war, and an impending oversupply in some sectors have d