China’s Big Tech firms like TenCent, Alibaba are buying up lots of properties following real estate crash

In a strategic move reflecting the resilience and growth ambitions of Chinese tech behemoths, Tencent Holdings and Alibaba Group Holding, among other major players, have emerged as significant buyers of land in mainland China. This trend unfolds against a backdrop of economic and regulatory challenges faced by both the technology and real estate sectors. Tencent, a social media and gaming giant, recently invested a staggering 6.42 billion yuan or about $905 million to acquire over 70,601 square meters of land in Beijing’s Haidian district, as revealed by the Beijing Municipal Commission of Planning and Natural Resources. The purpose behind this land acquisition is to address Tencent’s demand for a stable and centralized working space, with the company citing the need for additional office facilities for its over 12,000 employees in Beijing as of the end of 2023. This move by Tencent aligns with the broader recovery of the domestic technology sector from regulatory disruptions that compelled many firms to streamline operations and cut jobs. Despite a recent stock market downturn affecting the valuation of leading tech firms in China, authorities recognize the sector’s pivotal role in the nation’s future digital growth. In a parallel development, Alibaba recently completed the construction of its expansive Beijing campus, spanning 470,000 square meters in the business-centric Chaoyang District. The tech giant’s move follows a broader trend among industry peers, with miHoYo and Ant Group acquiring significant land plots in Shanghai and Hangzhou, respectively. MiHoYo, renowned for developing the globally popular Genshin Impact, invested over 1 billion yuan in a land plot in Shanghai’s Caohejing district, while Ant Group spent 1.5 billion yuan for a plot in Hangzhou’s Xixigu fintech cluster. JD.com, a prominent e-commerce player, also joined the trend by spending over 3 billion yuan to acquire land in Beijing’s Yizhuang area, where the company is headquartered. This strategic land acquisition by tech giants comes as office vacancy rates in China’s first-tier cities—Shanghai, Beijing, Guangzhou, and Shenzhen — are on the rise, leading to more favourable rental prices. Property consultancy CBRE predicts an up to 21 per cent increase in the vacancy rate of grade-A office space by the end of 2023, compared to 18.7 per cent in June 2023. This scenario provides tech firms with an opportune moment to secure prime real estate for their expanding operations amidst the evolving economic landscape. (With inputs from agencies)