The significance of Chinese commercial property in an Asian property portfolio

Abstract

Purpose

International investors have shown considerable recent interest regarding property investment in China via both direct and indirect property. The purpose of this paper is to assess the significance and performance of the China commercial property market compared to six developed and emerging commercial property markets in Asia.

Design/methodology/approach

This paper analyses the performance of commercial property in China over 1998‐2007 for both direct and indirect property. Risk‐adjusted performance analysis is used to assess the added value of China commercial property in a pan‐Asia portfolio, with the portfolio diversification benefits of China commercial property also assessed. Sub‐period analyses are also used to assess the dynamics of China commercial property.

Findings

This paper finds that China commercial property has shown significantly enhanced performance and diversification benefits in recent years. In a pan‐Asia property fund context, there are clear diversification benefits provided by China commercial property, with these benefits also being evident in the other Asian property markets. The findings highlight the benefits of a pan‐Asia property investment strategy by international property investors, as well as the key benefits and added‐value of including China commercial property in this pan‐Asia property investment strategy.

Originality/value

Previous empirical research into the China commercial property markets has been very limited. This paper rigorously assesses the role of China commercial property in a pan‐Asia property portfolio context. Given the increasing interest by the leading international property investors regarding investing in China commercial property, this research enables more informed and practical investment decision‐making regarding the role of both direct and indirect China commercial property as part of a pan‐Asia institutional property investment strategy.

Citation

Newell, G., Wing Chau, K. and Kei Wong, S. (2009), "The significance of Chinese commercial property in an Asian property portfolio", Journal of Property Investment & Finance, Vol. 27 No. 2, pp. 102-119. https://doi.org/10.1108/14635780910937827