China is making its mark on the world of tech. One of the first high-water marks was Alibaba Group’s IPO in 2014 that raised $25 billion, which is the largest amount ever raised in an initial public offering.
Another important Chinese tech firm is internet service portal Tencent, whose WeChat is a mobile communication service with both text and voice messaging. According to a recent report by PwC, “The rise of China’s silicon dragon,”
“Tencent’s WeChat achieved more mobile transactions over Chinese New Year than PayPal did in all of 2015. But it’s not just the internet giants that are breaking records: PwC’s analysis shows that Venture Capital (VC) investment in China-based internet businesses was worth USD 20bn in 2015, exceeding VC investment in United States-based internet business (USD 16 bn) for the very first time.”
With the rise of China as a tech powerhouse, the question for real estate investors is: what property sectors are offering compelling opportunities? Naturally, a wide range of options exist. However, three that are playing out in West are also providing opportunity sets in China as well. Those sectors are: retail centers that focus on creating an experience with entertainment, dining, and stores that offer click-and-collect and customer loyalty programs, etc.; logistics property development to support growing e-commerce companies; and even co-working office space. The growth of co-working space is noted in a recent article on “How technology is transforming China’s real estate industry.”
Where is the tech action? One of the main tech hubs in China is Beijing. The capital city is home to local companies such as Xiaomi (smartphones, tablet computers, smart home devices), Didi Chuxing (vehicles for hire), Meituan (internet voucher selling). Plus, a number of Western technology firms have research centers in Beijing, including Google, Oracle and Microsoft.
China’s tech market will be one to keep watching in the future. According to PWC, “in our opinion, the medium- to long-term outlook for China as the premier location for early-stage digital start-ups is highly positive.”
The views, statements and opinions expressed in this article are those of the author and are not necessarily those of Institutional Real Estate, Inc.
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John Hunt is conference program manager of Institutional Real Estate, Inc.
