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China鈥檚 interest rate cut will help boost the country鈥檚 housing market but will put further pressure on its retail sector, according to CBRE.

In a last-minute report, the global consultancy also predicted that Chinese capital would continue to flow to foreign real estate investments, albeit with heightened conservatism.

鈥淭he latest interest rate cut has brought the effective mortgage rate to a historic low level and this should provide further support to a recovering housing market,鈥� it said.

鈥淗owever, support from lower mortgage rates could be curtailed if economic growth turns out to be worse than expected.鈥�

China had been taking measures to avoid a house market crash in recent years.

that policy measures implemented by the Chinese government were having a positive effect.

At the time, CBRE鈥檚 global chief economist Richard Barkham said: 鈥淩ecent improvements in the Chinese housing market suggests that policy measures being implemented by Beijing, taken well before the current stock market turbulence, are starting to work.鈥� China鈥檚 economy, he said, is 鈥渓ikely heading for a soft landing鈥�.

Chinese retail property is most vulnerable to the rate cut, according to CBRE鈥檚 latest report, as it is already challenged by rising competition from online retailers, a 鈥渟upply glut鈥� and 鈥渁 significant change in tenant mix鈥�.

CBRE said: 鈥淭he recent developments in the stock market as well as a slower GDP growth will add further pressure to this sector.鈥�

The outlook could worsen for office markets in second-tier cities where there is already much supply and 鈥渓acklustre demand鈥�.

For this reason, CBRE expects investors to concentrate on first-tier cities where there is 鈥渞esilient demand鈥�.

鈥淚n the face of a challenging economic outlook, we believe deals will take longer to complete and investors will show a preference for core assets, driven by a flight to quality,鈥� the note said.

鈥淐ap rates may potentially move up, in particular for lower-tier cities and the retail sector.鈥�

CBRE said the long-term trend for outbound real estate investment would remain 鈥減ositive鈥�.

The company said: 鈥淎s the Chinese government continues to push for liberalisation, a tightening of capital controls currently appears unlikely.

鈥淭hat said, Chinese investors may turn somewhat cautious on deal selection in the near term with a focus on deal quality, in light of the uncertain economic outlook globally.鈥�