China's ghost towns may spook retail investors, but big money players are still targeting the mainland's property sector.
For one, Ivanhoe Cambridge, the property arm of Canada's second-largest pension fund Caisse de depot et placement du Quebec, is looking to increase its investments there.
While acknowledging that the mainland suffers from "shadow cities" and overbuilding, "we have also seen a lot of opportunity," said Rita-Rose Gagne, executive vice president for growth markets at Ivanhoe Cambridge, which has more than 48 billion Canadian dollars ($36.48 billion) under management.
"The Chinese economy is shifting towards a more sustainable pace of growth ultimately, but at the end of the day it's still an important growth," she told CNBC Thursday, adding that whether the country's gross domestic product (GDP) growth rate was 4 percent or 6 percent, "it's still large amounts of growth. We believe in the mid-to-long term story."
China's GDP data often meet with skepticism. While official data show the economy grew 6.9 percent on-year in the third quarter, some analysts believe growth may actually be as slow as 4 percent. Authorities have been working to transition the economy away from investments in manufacturing and infrastructure and toward a more consumption-driven model.
Ivanhoe Cambridge, which also recently partnered with Blackstone Group to buy Stuyvesant Town-Peter Cooper Village in Manhattan for $5.3 billion, appears to be positioning for that model.
In June, it invested $500 million in Shanghai-focused commercial-property developer Chongbang Group via a capital-raising. Earlier this year it invested as much as $180 million in China warehouse properties in tie-up with CBRE Global Investments. And it has a stake in the La Nova shopping center in Changsha.
Gagne said Ivanhoe Cambridge focused on China's tier-one cities by forging relationships with strategic partners. China's tier system ranks cities on their population size, services standards and quality of infrastructure.
China's property market has shown signs of stabilizing, even in the more stagnant residential sector, with the government backtracking on some cooling measures it put in place to calm the previously overheated market. The People's Bank of China (PBOC) has also cut interest rates six times since November 2014.
In the first eight months of the year, nationwide sales of new residential properties [excluding government-funded affordable housing] increased 18.7 percent on-year, higher than the 16.8 percent increase seen over the first seven months, according to the National Bureau of Statistics.
The commercial property outlook may face some clouds on the horizon. For example, there's no guarantee consumers are headed to the malls, with consumer sentiment indicators looking gloomy. The Westpac MNI China Consumer Sentiment Indicator fell to 109.7 in October from 118.2 in September, marking the lowest reading since the survey began in 2007. The business outlook over the coming year was also hard hit, with the Business Conditions in One Year category registering a 10.3 percent decline, while the Business Conditions in Five Years component fell 8.2 percent.
The country also still suffers from high vacancy rates in some regions, spurring accusations of a property bubble, but these so-called ghost towns are generally located well outside China's largest cities.
Ivanhoe Cambridge isn't the only big money investor undetered by dark clouds hanging over on China's property market.
John Saunders, managing director and head of Asia-Pacific real estate at BlackRock, told CNBC in September that Beijing's transition to service-sector growth was a healthy catalyst for commercial real-estate. BlackRock manages about $4.5 trillion in assets.
"Now is the time to be looking" Saunders said at the time, pointing to high-quality office, retail and logistics assets in tier-one cities including Beijing and Shanghai.
Others are also taking a more long-term view on China's slowing economy. Private equity giant Bain Capital, with about $75 billion under management, has targeted investments aimed at Chinese consumers.
"It's in a transition from a highly manufacturing-based economy to a more services economy and we're taking advantage of those trends," Steve Pagliuca, managing director at Bain Capital told CNBC Wednesday. "You're seeing a large middle class being built up so I think the future of China will be increasing technology businesses (and) consumer businesses. We're very active in those areas."
Within China, Bain has invested in China PnR, which provides infrastructure for financial services on the mainland, and brought the license for children's retailer Gymboree to the mainland in 2011.
- Nyshka Chandran and Neelabh Chaturvedi contributed to this report.
Clarification: This story was updated to reflect that Bain Capital brought the license for Gymboree to China in 2011.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1