The workers on the top girders can see the earth’s rotation.
CHINA’S OFFICE PROPERTY MARKETS ARE ABOUT TO EXPLODE!
By Jodi Summers
China’s secondary and tertiary markets are beginning to play a greater and greater role in the country’s real estate market, and analysts are speculating that China’s property market could quadruple in size by 2020.
The information comes courtesy of a report from at Jones Lang LaSalle titled China40: The Rising Urban Stars report.
“China’s Tier II and Tier III cities are dynamic centers of economic development and continued growth,” says Michael Klibaner, head of research Shanghai. “Massive infrastructure investment makes these markets increasingly accessible at a time when interest in China has shifted from being export oriented towards a focus on the domestic market.”
Analyzed in the report were the 40 top Tier II and Tier III cities which will be a strong future investment value. Each city was further analyzed for it real estate strengths. For office, Tianjon, Chongqing and Nanjong made the list; in retail Changsha, Wuhan and Wenzhou; and in Logistics Chengdu, Qingdao and Zhengzhou.
“The future evolution of China’s cities and their real estate markets will be driven by a rich combination of factors that are strongly influenced by government policy,” the report states. These policies focus on urbanization, with plans in place to see the city population explode to 850 million people by 2020. “The government’s ideal end vision of the urbanization process is a country wide network of environmentally sensitive cities each with their own unique competitive advantages and strong trading connections.”
China’s grade A office supply is roughly the size of Washington, DC’s entire supply, averaging 39.4 million square feet by the end of the year. But by 2011, that supply is expected to expand to 68.9 million square feet, with half the increase due to development projects in the Tier II and Tier III cities. The demand in these cities is being created by real estate advisors, insurance services and the banking sector.
JLL lists Dalian, Chengdu, Hangzhou, Shenyang, Wuhan, Tianjin, Nanjing and Chongqing as having the greatest potential to become robust office hubs.
Sacre bleu! Los Angeles is a better real estate…according to Forbes.com. In a recent top 10 article called World’s Best Places For Real Estate Buys, Ten cities investors will target in 2009 our beloved Los Angeles was #7 – after San Francisco and before Paris.
Washington D.C. topped the list this year, thanks to the proposed $1 trillion swell of government spending. As Forbes notes, “At present, D.C. has the lowest unemployment rate in the country–4.1%, compared to the 7.2% national average. With President Obama’s stimulus package recommending $1 trillion in new spending, it’s unlikely government jobs–and those they support–will be leaving the District anytime soon.”
Not many investors were looking at L.A. in 2008, as we were hammered by the subprime crisis and a massive volume of foreclosures. As we all know, our perceived property poverty curtailed spending and our whole local economy limped along. We were 19th on the 2008 Forbes World’s Best Places For Real Estate Buys, so this 12-point rise is a huge boost for real estate morale.
“It’s all about perception,” notes a local investor. “If people perceive Los Angeles is a good value, then it becomes a good value, and prices grow strong.”
Good news for local property owners – sales surged 102%in the residential sector, according to Radar Logic, a derivatives firm, and Forbes notes that this wave “has that market hinting at a bottom.”
The 2009 Top 10 Best Places For Real Estate Buys
1. Washington, D.C.
2. London, U.K.
3. New York, N.Y.
4. Tokyo, Japan
5. Shanghai, China
6. San Francisco, Calif.
7. Los Angeles, Calif.
8. Paris, France
9. Houston, Texas
Please note Forbes’ rankings come from the Association of Foreign Investors in Real Estate, a research association that tracks where member investors are finding the best opportunities around the world.
Here are the top 10 emerging cities:
- Shanghai, China
- Beijing, China
- Budapest Hungary
- Kuala Lumpur, Malaysia
- Santiago, Chile
- Guangzhou, China
- Mexico City, Mexico
- Warsaw, Poland
- Bangkok Thailand
- Shenzhen, China
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