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| Beijing: Industrial Estate Heating Up, and Poised to Become the Next Hotspot |
June 1, 2007 |
| Beijing’s industrial real estate market seems cheerless compared to that of Shanghai, yet it’s started to heat up. On the recent “Investing in Beijing: Forum on Factory Site Selection”, 15 of the 100+ participating enterprises expressed intentions to choose Liando U Valley. This is evidently insufficient to fill LDUV’s capacity of housing over 500 enterprises and creating over 40,000 jobs, a glaring contrast to Shanghai’s hot industrial property market. LDUV has done everything to promote itself. Located at the center of Yizhuang new city, a core industrial zone in Beijing, LDUV is an eco-friendly, low-density and computerized industrial park covering an area of 1,300 mu (about 86.67 hectares), with planned floor area of 1 million M2 and green area of 200,000 M2. With favorable policies from the Government, this international development zone will integrate functions including manufacturing, R&D, pilot-scale experiment, marketing, logistics and HQ. It claims to be “the industrial service platform for multinationals to enter China”, “Beijing’s leading economic zone only second to CBD”, and “the demonstration of Beijing’s industrial upgrade”. Huang Qigang, a manager at Colliers International in Beijing, tells China Business News that Beijing’s industrial property market, though newly established, is heating up rapidly, and that its less mature development means more room for properties, such as LDUV, to grow. “The next hotspot may well be industrial real estates,” said Zhou Jianchun, Secretary General of Land Economy Council at China Land Science Society. Currently, industrial land-use rights are being granted at low prices, and local governments are applying no limitation on supply, despite policies by the Ministry of Land and Resources. This is sending a signal that for the time being, industrial land are easier to increase in value and thus generate more returns than commercial real estate. With fierce competition in Beijing, investment in office buildings and shopping malls are entailing rapidly increasing costs and dwindling returns. Some developers are thinking again, and diverting more funds from commercial real estates to industrial real estates. Meanwhile some enterprises are also moving out of the CBD. Most recently, Capitaland acquired the ownership of Hong Zuan Mansion in Shangdi Information Industry Center, and is going to lease it to IBM for its R&D center. In addition, many international logistics investment funds are seeking opportunities at Shunyi Tianzhu in Northwestern Beijing and at Tongzhou Majuqiao in southeastern Beijing. Another indispensable factor is the Government’s exclusive order that discourages foreign capital from flowing into Beijing’s commercial real estates. In a succession of monthly reports on Beijing’s real estates market, CB Richard Ellis, a world-renowned real estate service firm, pointed out that Beijing’s industrial properties are emerging as a new hotspot for foreign institutional investors. “With the market expanded and developed, and with the industrial chain improved and regulated, China’s industrial properties are becoming a focus of foreign investment for its huge potential,” says Peng Xi, Citigroup’s Deputy Executive for real estate investment. It is understood that a developer in Beijing recently acquired a storage area of nearly 100,000 M2 with plans to build an industrial park to attract Japanese enterprises. In the first quarter of 2007, only several thousand square meters of storage area are left available in Beijing Economic-technological Development Area (BDA). The neighboring Tongzhou Logistics Park is also seeing strong demands for industrial land, with 138736 M2 available. According to analysis by Jones Lang LaSalle, in the second quarter of 2007, 20,000 square meters of storage space will hit the market, and 250,000 M2 of land will be for sale at RMB 825/ M2. As a comparison, in the same period, the average leasing price in Shanghai for industrial land stands at USD 134/ M2. Commenting on the evident contrast between industrial property markets in Beijing and Shanghai, Huang Qigang says Beijing’s problem is the relatively low capacity of its suburbs and neighboring areas to house enterprises; most foreign enterprises tend to opt for urban areas such as the CBD. Gao Xiyou, Director of Investment Department at Beijing Development and Reform Commission, also told China Business News that Beijing’s real estate market is largely influenced by its industries, which have been constrained by Beijing’s scarce resources: Beijing’s per capita water availability is only one eighth of the country’s average, per capita land resource availability is merely one sixth of the country’s average, and bulk of its energy are diverted from other provinces. “Beijing must develop high-end, high-efficiency and highly radiant industries, because of its scarce resources.” says Gao. Beijing’s industrial properties, including LDUV, are proposing a combined development of secondary and tertiary industries, with high-end service industries taking the lead, IT, manufacturing, new medicine and new material as the mainstay, and with the clustering of production service industries. http://shop.gz.focus.cn/news/2007-06-01/318757.html |
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 |