(Bloomberg) -- A major state-owned landlord in Shanghai is offering to sell most of its office buildings for at least 30 billion yuan ($4.1 billion), people familiar said, underscoring the severity of the city’s commercial property downturn. 

Shanghai Lujiazui Finance & Trade Zone Development Co., owned by the state assets supervisor of Shanghai’s Pudong district, last month offered to sell about 20 office buildings in the financial hub, said the people, who asked not to be identified discussing private information. The office assets, which includes the iconic DBS Bank Tower, are offered individually instead of as a portfolio. 

The plans are preliminary and could be subject to change, the people added. Lujiazui Finance & Trade Zone didn’t immediately respond to an emailed request for comment. 

Many of the buildings to be sold sit in Lujiazui financial district, which houses the biggest banking institution tenants, the people added. Some are located in Qiantan, a booming business zone where a number of state firms are headquartered.  

China’s dire commercial real estate market is prompting institutional investors and landlords to cash out in the biggest cities. The sellers include global asset manager BlackRock Inc., which sought to offload an office complex in Shanghai at about 30% discount to its purchase price, Bloomberg reported earlier this year. 

In Shanghai, office vacancy climbed to 20.9% in the first quarter, the highest in almost two decades, according to CBRE Group Inc. Rents of Grade-A offices slumped to the lowest level in nearly a decade, as new supply outweighed demand, Cushman & Wakefield data showed. In April, Cushman said the uptick in vacancies is expected to drag on within the next 12 months, weighing down rental prices. 

Established in 1990 to develop Shanghai’s Lujiazui financial district, the state landlord holds commercial real estate in the city’s prime locations to collect recurring rents. The assets range from offices and malls, to business parks and hotels. The sale signals a rare pivot in strategy. 

“Shanghai’s office market is likely to undergo a long-term correction,” the company said in its annual report on Monday. “Mammoth new supply will make the competition of office renting unprecedentedly cut-throat this year.” 

The company said in the report it would rely on sales in addition to rent to boost income. 

The sales are expected to further weigh on the commercial property market. In the first quarter, such deals slumped 63% from the previous quarter to 16.8 billion yuan due to the absence of large transactions, Jones Lang LaSalle said in an April report. 

Prime office value in Shanghai has tumbled about 30% from their pre-Covid high, Colliers International Group Inc. said earlier this year. 

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