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| Industrial Real Estates, a New Focus of Attention |
May 30, 2007 |
| Five major agents zealous in industrial real estate As early as in 1994, CB Richard Ellis started to offer industrial real estate services in mainland China. CBRE’s Industrial and Logistics Service team is committed to providing efficient, professional and comprehensive industrial property services, including rental review, lease renewal, design built and lease-back of facilities, etc. The dedicated team of highly experienced executives with excellent market knowledge strives to deliver the best real estate solutions to clients and secure for them the most favorable leasing, purchasing and renewal terms. Their Industrial Project team also provides a wide range of specialist professional industrial services to developers and investors with respect to the sales, leasing and marketing of their industrial properties throughout China. Andrew Hatherley, Executive Director of Industrial & Logistics Services, CBRE in Greater China said in an interview that Pudong has sustained a steady economic development in recent years. Industrial real estate and logistics are developing rapidly in Pudong, and is showing huge potential for further development, with the massive inflow of foreign investors, as well as domestic manufacturers. Industrial real estate is a major focus for CBRE’s new office in Pudong. Most recently, Jones Lang LaSalle has announced its new branch in Pudong, mainly engaged in industry real estates; there has also been news that Colliers International is eyeing industrial estates in Pudong. With the rapid development of China’s economy, Shanghai has become one of the most convenient destinations for foreign investment, and has attracted many foreign enterprises, especially manufacturing enterprises, to set up factories here. Many real estate agents, including the five major ones, are optimistic about the future of China’s industrial estates, and are racing to snatch market shares. Experts say that in the coming year, ROI rates of Shanghai’s industrial properties will drop from the current 9%~10% to 8%~8.5%. However, the zeal for investment in industrial estates is going even higher. Analysts explain that this is caused by the rapid expansion of retail stores in Shanghai, because these retail enterprises require a lot of logistics and warehouse facilities. Price rising steadily for industrial land Since January 1, 2007, all industrial land (including logistics facilities) is required to be granted only through bidding, listing and auction. Industry analysts say that this may drive up prices of industrial land and costs in developing logistics facilities. In the fourth quarter last year, the average price for industrial land in Shanghai grew by 3% q-o-q to RMB 852/M2. However the “bidding, listing and auction” policy and the consequential price hike did not curb interests in investment, according to Hu Huafeng, Director for Investment Attraction at Shanghai Comprehensive Industrial Development Zone, one of the nine municipal-level development zones. Though detailed measures to implement the new policy have not been promulgated, project negotiations have been going on. Major enterprises such as Sony and Samsung are intending to “buy” land in the development zone. Meanwhile, the threshold has been raised for acquiring land in development zones. Shanghai Comprehensive Industrial Development Zone, for example, requires a minimum registered capital of USD 200,000 for each mu (about 666.67 M2) that the enterprise intends to acquire. Domestically funded enterprises have to hold a very promising project to actually acquire any land; foreign-funded enterprises have also to meet certain environmental standards besides requirements for registered capital. According to Hu, large-scale foreign companies or companies with a long history in China’s market, including Sony, Samsung, Phillips and domestically-funded CECT, would generally choose to buy industrial land and build factories. In contrast, small processing enterprises and foreign companies new to China would lease properties before they are established in the market. Yet in general, demands for industrial estates have been rising dramatically this year, with many former lessees seeking for industrial land to build their own factories. Foreign enterprises starting to buy instead of lease. Your correspondent knows an Italian-funded enterprise producing export-oriented luxury sofa. Having been in Shanghai for several years, this enterprise has always been leasing factories. Recently it decides to buy 70-million-yuan industrial properties in Fengxian District. According to the company’s director in China, they decided to buy properties because buying is more cost-effective for its planned production expansion and long-term development in China, and because the acquired land may well increment in value in the future. However, problems arose when buying properties. Many industrial zones are unwilling to accept such foreign-funded, fully export-oriented enterprises, because they do not generate any tax revenue for the locality; instead, the government has to return tariffs to the enterprise. The company could not enter export-oriented processing zones, because it did not meet the requirement for registered capital. In this dilemma, the company had to choose used properties. They finally signed the contract on April 18, after picking a suitable one out of more than a dozen used properties and negotiating with its owner. The manager says because of the new land-use policy and the rising threshold for acquiring industrial land, it has become imperative to buy land now for enterprises seeking long-term development in China. Another reason why foreign enterprises are racing to acquire land, he believes, is the potential increment of value. For them, acquiring industrial land means killing two birds with one stone. http://office.sh.soufun.com/2007-05-30/1075938.htm |
China Industrial Real Estate Club Address: Room 803-811 Oriental Plaza No.1500 Century Avenue Pudong 200122 Shanghai China Tel: +86 21 68407631 Fax:+86 21 68407632 Email:info@cireclub.com Web: www.cireclub.com Summit Web: www.ciresummit.com |