China Property Market

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China Property Market an overview of the Major
Cities

• Margaret Brooke, FRICS
• CEO, Professional Property Services

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What is China?

• Population of 1.3 billion
• 150 or more cities of over 1 million people
• Rapid GDP growth and demographic changes over
  last two decades
• Accounts for 4-5 of world trade
• Largest recipient of FDI US53.5 billion in
  2003
• Low cost base, growing services sector

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Major first and second tier cities
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What drives Chinas development?

• FDI
• WTO Membership
• Manufacturing and exports
• Property development
• Auto industry
• Technology development
• Power and steel

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Construction Boom!
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Controlling Demand for Property Development

• Controls on lending to real estate sector
  following signs of bubble developing
• Incentives to developers of mass market
  residential properties
• Land use rights disposal by auction
• Selected planning/investment controls
• Massive infrastructure spending subject to
  reviews to prevent overheating

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Infrastructure developments
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Huangpu Port Largest Container Port in Southern
China
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Infrastructure 2020 - Shanghai
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2003 Economic Statistics (JLL)
Beijing Shanghai
Population 14.56 million 13.34 million
Transient population 3.08 million 3.87 million
GDP RMB 361.2 billion RMB 540.9 billion
Growth rate of GDP 10.5 10.9
Contracted FDI US 3.27 billion US 10.57 billion
Total retail sales RMB 191.7 billion RMB 203.5 billion
Retail sales growth rate 16.6 9.3
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2004 Property Market
US psm pm Beijing Shanghai
Office Rents/Grade A 20.00 19.10
Office Vacancy Rate 14.5 17.7 / 13.3
Office Prices/Yield 2,500/9 2,455/8.3
Residential Rents 17.8 20.50
Residential Prices 1,650/8 2,350/7.5
Residential Vacancies 23.8 18.3/17.8
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Beijing - Key Drivers

• Administrative capital
• Science and technology centre
• Centre of higher education
• Culture/tourism
• Olympics 2008

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Beijing Projects
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Shanghai and the Yangtze River Delta - Key Drivers

• Financial and Commercial Centre
• Proactive City Governance
• Pudong Development Zone
• City Branding
• Tourism
• World Expo 2010

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Pudong 1990
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Pudong 2003
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Notable projects in Shanghai
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Pearl River Delta (PRD)
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Pearl River Delta Key drivers

• Guangzhou and Shenzhen major centres
• Manufacturing and trade centre
• Recipient of highest levels of manufacturing FDI
• Excellent external and export links
• SEZ and SAR advantages
• Tourist attractions

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Some current foreign players
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Shenyang
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Dalian
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Tianjin
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TEDA Industrial Park

• Founded in 1984
• 33 sq.km.
• By June 2003, 3651 from 69 countries registered
• 15 return on industrial capital achieved
• Fortune 500 tenants

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Wuhan
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Suzhou
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Suzhou Industrial Park
Land Purchase Price US 20/sqm
Factory Purchase Price US365/sqm
Factory Rental Price RMB 0.60/sqm/day
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Hangzhou
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Chengdu
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Chongqing
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Sustainability

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

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Thank you

• for your interest

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• Professional Property Services Limited