China Property Market – an China Property Market – an overview of the Major Citiesoverview of the Major Cities

Margaret Brooke, FRICSMargaret Brooke, FRICS

CEO, CEO, Professional Property Professional Property ServicesServices

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What is China?What is China?

Population of 1.3 billion Population of 1.3 billion 150 or more cities of over 1 million people150 or more cities of over 1 million peopleRapid GDP growth and demographic Rapid GDP growth and demographic changes over last two decadeschanges over last two decadesAccounts for 4-5% of world tradeAccounts for 4-5% of world tradeLargest recipient of FDI – US$53.5 billion Largest recipient of FDI – US$53.5 billion in 2003in 2003Low cost base, growing services sectorLow cost base, growing services sector

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Major first and second tier citiesMajor first and second tier cities

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What drives China’s development?What drives China’s development?

FDI FDI

WTO MembershipWTO Membership

Manufacturing and exportsManufacturing and exports

Property developmentProperty development

Auto industryAuto industry

Technology developmentTechnology development

Power and steelPower and steel

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Construction Boom!Construction Boom!

50% of the world’s cement !

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Controlling Demand for Property Controlling Demand for Property DevelopmentDevelopment

Controls on lending to real estate sector Controls on lending to real estate sector following signs of bubble developingfollowing signs of bubble developingIncentives to developers of mass market Incentives to developers of mass market residential propertiesresidential propertiesLand use rights disposal by auctionLand use rights disposal by auctionSelected planning/investment controlsSelected planning/investment controlsMassive infrastructure spending – subject Massive infrastructure spending – subject to reviews to prevent overheatingto reviews to prevent overheating

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Infrastructure developmentsInfrastructure developments

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Huangpu Port – Largest Container Huangpu Port – Largest Container Port in Southern ChinaPort in Southern China

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Infrastructure 2020 - ShanghaiInfrastructure 2020 - Shanghai

Research, Consultancy & Special Projects, ShanghaiUpdate: May, 2000 c hi

Metro Line 1

Outer Ring Road(Under Construction)

Suzhou River

Xupu BridgePu Dong

Pu DongInternational

Airport

3

Hong Qiao Airport

1

Da Pu Road Tunnel3

Yan’ an RoadTunnel

2

Yan’ an RoadPedestrian Tunnel

1

1

4

4

5

2

67

8

8

7

1

1

Pearl Line (UnderConstruction)

9

F

F

2

Metro Line 11(Proposed)

Metro Line 2

21

A

A

B

B

10

10

C

5

D

D

Inner Ring Road

E

E

G

G

Nanpu Bridge

Yangpu Bridge

Shanghai Transport InfrastructureShanghai Transport Infrastructure

6

C

9

3

3

11

North SouthElevated Road

EMetro Line (proposed)

Light Railway(proposed)

4

5

6

4 Dalian Road Tunnelunder planning)

5 Fuxin Road East Tunnel(under planning)

6 Wusongkou Road Tunnelunder planning)

Bridge under planning)

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2003 – Economic Statistics 2003 – Economic Statistics (JLL)(JLL)

BeijingBeijing ShanghaiShanghai

PopulationPopulation 14.56 million14.56 million 13.34 million13.34 million

Transient populationTransient population 3.08 million3.08 million 3.87 million3.87 million

GDPGDP RMB 361.2 billionRMB 361.2 billion RMB 540.9 billionRMB 540.9 billion

Growth rate of GDPGrowth rate of GDP 10.5%10.5% 10.9 %10.9 %

Contracted FDIContracted FDI US$ 3.27 billionUS$ 3.27 billion US$ 10.57 billionUS$ 10.57 billion

Total retail salesTotal retail sales RMB 191.7 billionRMB 191.7 billion RMB 203.5 billionRMB 203.5 billion

Retail sales growth rateRetail sales growth rate 16.6%16.6% 9.3%9.3%

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2004 – Property Market 2004 – Property Market

US$ psm pmUS$ psm pm BeijingBeijing ShanghaiShanghaiOffice Rents/Grade A Office Rents/Grade A $20.00$20.00 $19.10$19.10Office Vacancy RateOffice Vacancy Rate 14.5%14.5% 17.7% / 13.3%17.7% / 13.3%

Office Prices/YieldOffice Prices/Yield $2,500/9%$2,500/9% $2,455/8.3%$2,455/8.3%Residential RentsResidential Rents $17.8$17.8 $20.50$20.50

Residential PricesResidential Prices $1,650/8%$1,650/8% $2,350/7.5%$2,350/7.5%

Residential VacanciesResidential Vacancies 23.8%23.8% 18.3%/17.8%18.3%/17.8%

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Beijing - Key DriversBeijing - Key Drivers

Administrative capitalAdministrative capital

Science and technology centreScience and technology centre

Centre of higher educationCentre of higher education

Culture/tourismCulture/tourism

Olympics 2008Olympics 2008

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Beijing ProjectsBeijing Projects

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Shanghai and the Yangtze River Shanghai and the Yangtze River Delta - Key DriversDelta - Key Drivers

Financial and Commercial CentreFinancial and Commercial Centre

Proactive City GovernanceProactive City Governance

Pudong Development ZonePudong Development Zone

City BrandingCity Branding

TourismTourism

World Expo 2010World Expo 2010

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Pudong 1990Pudong 1990

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Pudong 2003Pudong 2003

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Notable projects in ShanghaiNotable projects in Shanghai

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Pearl River Delta (PRD)Pearl River Delta (PRD)

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Pearl River Delta – Key driversPearl River Delta – Key drivers

Guangzhou and Shenzhen major centresGuangzhou and Shenzhen major centres

Manufacturing and trade centreManufacturing and trade centre

Recipient of highest levels of Recipient of highest levels of manufacturing FDImanufacturing FDI

Excellent external and export linksExcellent external and export links

SEZ and SAR advantagesSEZ and SAR advantages

Tourist attractionsTourist attractions

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Some current foreign playersSome current foreign players

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ShenyangShenyang

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DalianDalian

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TianjinTianjin

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TEDA Industrial ParkTEDA Industrial Park

Founded in 1984Founded in 198433 sq.km.33 sq.km.By June 2003, 3651 By June 2003, 3651 from 69 countries from 69 countries registeredregistered15% return on 15% return on industrial capital industrial capital achievedachievedFortune 500 tenantsFortune 500 tenants

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WuhanWuhan

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SuzhouSuzhou

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Suzhou Industrial ParkSuzhou Industrial Park

Land Purchase Price: US$ 20/sqm

Factory Rental Price: RMB 0.60/sqm/day

Factory Purchase Price: US$365/sqm

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HangzhouHangzhou

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ChengduChengdu

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ChongqingChongqing

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SustainabilitySustainability

Government is conscious of sustainability issues Government is conscious of sustainability issues and attempting to curb inter-city competition and and attempting to curb inter-city competition and encourage more integrated planning and encourage more integrated planning and developmentdevelopmentChina is a signatory to Agenda 21 and has China is a signatory to Agenda 21 and has strong environmental regulations – strong strong environmental regulations – strong implementation is the problem implementation is the problem Difficult to achieve highest standards when so Difficult to achieve highest standards when so much needs to be done in central and western much needs to be done in central and western provincesprovinces

Thank youThank you

for your interestfor your interest

Professional Property Professional Property Services LimitedServices Limited

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