(Yicai Global) April 3 -- Real estate markets in many Chinese cities began to recover in March, with overseas investment spearheaded by private equity giant Blackstone Group the major driving force.

Despite recent reports of higher vacancy rates in office buildings and shopping malls, foreign investment in the commercial properties in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen has been climbing, according to new figures.

Foreign investment surged 62 percent to CNY78 billion (USD11.6 billion) last year, the highest level since 2005, Securities Times reported, citing data from US commercial properties service provider CBRE.

Blackstone and Singaporean property developer Capitaland were the two main buyers. Capitaland teamed up with Government of Singapore Investment to do last year's biggest deal, shelling out around CNY12.8 billion to buy Shanghai's tallest twin towers, a project consisting of two 50-storey office buildings and an integrated shopping center.

Foreign investors bought CNY16.9 billion of big properties in Beijing in 2018, making up 30 percent of the total. Acquisitions in Shanghai accounted for 60 percent, according to data from UK realty consultant DTZ.

Led by Blackstone, foreign buyers have continued their spending spree this year. New York-based Blackstone bought a 50 percent stake in three shopping centers in Xi'an and Zhengzhou in China and in South Korea for USD480 million from US commercial property titan The Taubman Company.

Soon afterwards it spent HKD7 billion (USD894.7 million) repurchasing almost 70 percent of Hong Kong International Construction Investment Management Group, a unit of HNA Real Estate Holdings now known as HNA Airport Development. The group also plans to buy Changtai Plaza in Shanghai for USD1.5 billion, overseas media reported recently.

Meanwhile, Greenland Hong Kong Holdings announced a short trading suspension on April 1. The firm has halted trading of its stock, USD450 million notes and USD400 million bonds possibly because it plans to sell three office buildings in Wuliqiao sub-district in Shanghai to Canadian fund Brookfield Asset Management, per market information.

China's real estate market is becoming stable and the rents for office and commercial buildings have even dropped in some cities. But a question remains: why is foreign investment still rising?

The trend in overseas investment doesn't imply speculation, but demonstrates that foreigners are optimistic about China's industrial economic development, according to Yan Yue, research head of the think tank center at Shanghai Yiju Real Estate Research Institute. Yan predicts a market recovery from the second half of this year, which will benefit property deals. Foreign investors face fewer restrictions on buying real estate and so investment returns are increasing, he added.