50% off Disposal of Office Buildings in Shanghai Wanxiang City The Migration History of the Asset Landscape Behind the Exit of Gaw Capital
Gaw Capital, the foreign investment giant that once thrived in China's commercial real estate market, is now quietly making its exit.
Recently, market sources reported that Gaw Capital plans to sell four Grade A standalone office buildings, Blocks A, B, C and D, of Shanghai MixC located in Minhang, Shanghai.
Earlier, on June 22, Colliers International officially listed the aforementioned project for sale, with disposal methods including en-bloc sale and individual building sale.
Looking back four years ago, Gaw Capital acquired these four properties from China Resources Capital for a total consideration of RMB 2.8 billion, equivalent to a unit price of approximately RMB 46,000 per square meter.
Current disclosures indicate that each building is priced at around RMB 400 million, and the en-bloc valuation of all four buildings is only between RMB 1.5 billion and RMB 1.8 billion. Compared to the purchase price, the book value has shrunk by as much as RMB 1 billion to RMB 1.3 billion, which is undoubtedly a "fire sale at a steep loss".
However, the market generally believes that Gaw Capital's discounted asset disposal does not stem from operational deterioration on the capital side, but is driven by rigid fund redemption pressure, high US dollar interest erosion, and the continuously rising capitalization rate of commercial properties.
When the balance between cost and return tilts severely, exiting at a discount becomes the only viable option.
Exiting at 50% of the Original Price
At No. 1799 Wuzhong Road, Minhang District, Shanghai, adjacent to the Ziteng Road Station of Metro Line 10, four Grade A office buildings stand side by side — this is the office property portfolio of Shanghai MixC.
According to public records, the project was co-developed by China Resources and Shentong Metro, with a total gross floor area of 60,800 square meters, including 57,000 square meters of office space and 3,857 square meters of retail commercial space.
In January 2019, through its Gaw Real Estate Partners VI fund, Gaw Capital acquired these four ultra Grade A office buildings and their supporting retail podiums from China Resources Capital for a total consideration of RMB 2.8 billion, equivalent to a unit price of approximately RMB 46,000 per square meter.
At that time, the market widely praised this bold move, and the transaction was regarded as another classic case of foreign capital increasing its holdings in core commercial assets in China.
Yet seven years later, the situation is completely different. Recent market rumors say that the aforementioned four office buildings are being listed for sale, with each priced at only around RMB 400 million, and the en-bloc valuation no more than RMB 1.5 billion to RMB 1.8 billion. The unit price has been directly halved to RMB 24,700 to RMB 29,600 per square meter, equivalent to a 50% discount on the purchase price.
Why is Gaw Capital willing to sell at a 50% discount?
On one hand, the reversal of capitalization rates has completely overturned the asset valuation logic. Third-party data shows that in 2019, the capitalization rate of Grade A office buildings in core areas of Shanghai and Beijing hovered at a low level of 3.2% to 3.6%, but rose to the range of 4.5% to 5.6% in 2024, and has now reached a high level of 5.5% to 6.1%.
A rising capitalization rate means that for the same rental income, the market is now willing to pay a significantly lower asset price. This is not due to a decline in the project's quality, but a systemic valuation correction across the entire industry. As a result, the book value of the MixC property has been passively reduced by several notches.
On the other hand, Gaw Real Estate Partners VI completed its final fundraising round in 2019, and it has now been seven years, officially entering the exit window period. For fund managers, returning principal and returns to Limited Partners (LPs) is an ironclad rule of rigid redemption with no room for negotiation.
What is more challenging is the capital-side dilemma. Gaw Capital previously disclosed on its official WeChat account that among the LPs of Gaw Real Estate Partners VI, 37% are from Asia, 17% from North America, and 46% from Europe, with more than 60% in total being overseas funds that calculate returns in US dollars.
The fund launched fundraising in 2018 and closed fully in 2019. At that time, the Federal Reserve's benchmark interest rate was only 1.5%-2.5%, but now even after several rounds of interest rate cuts, the US dollar interest rate still remains high at 3.5%-3.75%.
The surge in outstanding loan interest, coupled with the sluggish office market and weak rental performance, has severely eroded the project's cash flow, leading to a sharp decline in the cash distribution rate. Meanwhile, European and American LPs make no concessions on their rigid requirements for US dollar dividends, and multiple pressures have ultimately become "the last straw that breaks the camel's back".
For Gaw Capital, rather than stubbornly waiting for interest rates to recover and the market to rebound, it is better to dispose of assets at a discount as early as possible to lock in the upper limit of losses and cash out quickly.
Investment Migration
Founded in 2005, data shows that as of the third quarter of 2025, Gaw Capital has AUM (Assets Under Management) of USD 34.3 billion, with total raised equity capital of USD 24.6 billion.
Since its establishment, the firm has successfully raised seven pan-Asia focused diversified funds, multiple value-add/opportunistic funds managed in the US, one Asia-Pacific hotel fund, one European hotel fund, one growth equity fund, and one credit fund.
In recent years, its investment footprint in the Chinese market has been continuously shifting.
According to research by Inlife News, in recent years Gaw Capital has been continuously divesting mature Grade A office buildings in Shanghai and Beijing. Among them, the star projects acquired in its early years such as Shanghai's 353 Plaza, Shanghai's Ciro's Plaza, Beijing's Yinke Center, and Guangzhou's City Mall have all been fully exited, becoming footnotes in the fund's historical performance records.
Currently, Gaw Capital holds very few remaining office assets, only the Shanghai Ocean Tower, the T6 Office Building of Hangzhou E-Commerce City, and the four office buildings of Shanghai MixC that are now listed for sale.
The Shanghai Ocean Tower, a 25-story Grade A office building located in the core area of People's Square, was acquired by Gaw Capital in partnership with Quad Real Property Group from ARA Asset Management for approximately RMB 3 billion in November 2018.
However, market rumors spread at the end of last year that a fund led by Gaw failed to make timely payment of a USD 260 million loan due on November 12, which may trigger a default. The collateral for this loan is precisely the Shanghai Ocean Tower.
Insiders revealed that Gaw had tried to sell the property to repay the debt, but failed to reach a transaction before the loan maturity date.
The T6 Office Building of Hangzhou E-Commerce City is a transaction that Gaw made in 2020. Located in the core area of Hangzhou's Future Science and Technology City, adjacent to Alibaba's global headquarters, the 46-story, 220-meter-tall building has a total gross floor area of 96,900 square meters, with its main tenant being the Alibaba Group. This move by Gaw Capital back then was clearly a bet on the expansion dividend of the internet giant.
But the golden era of office buildings is over, and Gaw Capital's frequent retreats in recent years are the most straightforward illustration of this.
Apart from commercial properties, as early as the beginning of 2024, Gaw Capital sold two industrial parks in Jiangmen, Guangdong, and one logistics park in Xi'an, Shaanxi to Ping An in an en-bloc transaction valued at over RMB 2 billion.
After exiting commercial properties and logistics assets, what other tracks has Gaw Capital placed its bets on?
Research by Inlife News found that the firm is currently heavily investing in four new tracks: biomedical industrial parks, IDC data centers, outlet retail businesses, and long-term rental apartments.
Biomedical industrial parks are the core allocation direction of Gaw Real Estate Partners VII. The fund completed fundraising in 2023, and multiple biomedical parks under its management in Shanghai have completed large-scale refinancing earlier this year, demonstrating a fast-paced capital operation rhythm.
In terms of IDC data centers, Gaw Capital partnered with China Data to deploy in this field as early as 2019, and there are currently no disposal plans, clearly positioning these assets as long-term holdings.
Outlet retail businesses serve as a stabilizing asset in Gaw Capital's portfolio. At the end of 2025, the firm successfully acquired the Chengdu Florentia Village through an onshore Pre-REITs fund.
At that time, Kenneth Poon, Managing Principal, Head of Greater China, and Co-Head of Alternative Assets Investment of Gaw Capital, explicitly stated: "We are full of confidence in China's outlet industry, which continues to benefit from the rise of the middle class and the growing consumer demand for high-quality luxury goods at cost-effective prices."
Gaw Capital has also taken frequent actions in the long-term rental apartment sector. In January 2025, Gaw Capital partnered with CCB Residence Rental to establish a real estate private equity fund focusing on the development and operation of long-term rental apartments in Beijing; two months later, it acquired a 60% equity stake in a company under the Homelinks Apartment group, and the two parties will jointly develop the Beijing long-term rental market after the transaction is completed.
From office buildings to industrial parks, from data centers to outlets, from long-term rental apartments to biomedical parks... Gaw Capital's asset map is undergoing a transformation and renovation.
As the era of investment dividends for traditional core office buildings comes to an end, policy-friendly assets such as industrial carriers, computing power infrastructure, and affordable rental housing are gradually replacing the former "kings of commercial properties" and becoming new allocation targets for foreign capital.
From this perspective, Gaw Capital's 50% discount sale of the MixC property this time may not be an isolated case, but an industry microcosm of real estate funds actively adjusting their portfolios in response to market cycles.
This article is from the WeChat Official Account "Inlife", authored by Inlife News, and authorized for distribution by 36Kr.