Jones Lang LaSalle issues China50: an in-depth study of future commercial real estate opportunities in China
Beijing & Shanghai, 20 March 2012 - Jones Lang LaSalle has released a new report today, China50: Fifty Real Estate Markets that Matter, highlighting the opportunities for corporate property occupiers, real estate investors, developers, retailers and hotel operators in 50 secondary and tertiary cities across mainland China (download China50 infographic).
Nine cities, defined as Tier 1.5 Transitional Cities, have separated themselves from the pack: Chengdu, Chongqing, Dalian, Hangzhou, Nanjing, Shenyang, Suzhou, Tianjin and Wuhan. They are fast-tracking to maturity and, as large diversified open economies, are creating depth across multiple real estate sectors.
Chengdu has emerged as the premier China50 real estate market; Chongqing, Shenyang and Tianjin have built up the strongest momentum.
To keep pace with the phenomenal speed of economic growth, over 80 million sq. m of modern retail and nearly 30 million sq. m of Grade A offices will be built in China50’s main cities over the remainder of the decade, bringing much needed stock to the market.
Jones Lang LaSalle predicts that retail will provide the greatest real estate opportunity in China50, and that significant opportunities will also exist in the logistics sector.
KK Fung, managing director for Jones Lang LaSalle Greater China said: “The new China50 are being transformed at an unprecedented rate by the scale of building and by the progress of economic development. They are the cities that we believe will be hitting the headlines over the next decade and that will provide opportunities beyond the familiar Tier I cities.”
Michael Klibaner, head of research for Jones Lang LaSalle China noted: “These 50 cities combined are expected to account for 12% of overall global economic growth over the next decade and China50 contains all of the world’s ten fastest growing large cities, led by Chongqing, Tianjin and Chengdu. These numbers are a clear signal that China50 is one of the world’s most exciting real estate opportunities.”
The development of over 100 million sq. m of commercial space over the next decade is bringing much needed high-quality stock to these 50 cities. As developers move deeper into China50, it is also helping to support the expansion of domestic and international corporates, retailers and hotel operators across the China50, into Tier 3 cities as they tap into favourable demographics and seek ‘first mover’ advantage.
“As the volume of tradable property assets increases and transparency improves, institutional investor interest in commercial real estate in the China50 will increase. Their focus will be on the retail sector, which provides the largest real estate opportunity, driven by strong growth in China50’s middle class population, which is expected to double to over 125 million by the middle of the decade.” noted Mr Fung.
Significant opportunities also exist in the logistics sector where there is a severe under-provision of international grade stock; China’s total modern logistics stock is barely equally to that of Boston in the United States. Prospects for logistics will be further boosted by improving transport infrastructure, retail growth and a shift inland of China’s manufacturing base.
KK Fung concluded: “The China50 offers a compelling long-term growth story, but the road to maturity is unlikely to be smooth and fears of excessive risk may lead to some caution in the property market over the short to medium term. They will not be immune from volatilities in the global economy, but importantly, some China50 cities, such as Chongqing, Wuhan and Xi’an may prove to be more resilient than most, underpinned by the structural growth of China’s domestic economy.”
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue USD3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1000 locations worldwide, including 200 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with USD47.7 billion of assets under management.
Jones Lang LaSalle has over 50 years of experience in Asia Pacific, with over 22,000 employees operating in 78 offices in 14 countries across the region. The firm was named the Best Property Consultancy in Asia Pacific at 'The Asia Pacific Property Awards 2011 in association with Bloomberg Television'.
