A Step Towards Maturity: The Real Estate (Regulatory & Development) Bill In India

June 18th, 2013 by Sujash Bera

The Union Cabinet of India, after a long hiatus, finally cleared the Real Estate (Regulatory & Development) Bill on 4 June 2013. The bill aims to instil transparency into a sector that has been so far unregulated and has witnessed haphazard growth. Although in its current form the bill only covers new projects of 4,000 sqm or more in the residential sector, consumers can now expect some of the best practices of this industry to come into force, including protecting their interests against developer malpractices, such as timeliness of project completion, delay in accountability and dispute resolution. Once the bill comes into force, there will be a standard definition of related terminology throughout the country. The bill proposes a regulator in each state and union territory. In addition, it talks about a tribunal to speed up the dispute resolution process. However, before becoming an act, the bill has to clear both houses of the Parliament of India in the upcoming monsoon season.

A major concern for developers is securing capital, as they will not be able to use funds received from one project as capital for another project, as the “70% or lower” clause mandates the amount to be kept in a separate bank account to be used for the said project only. Developers would become more dependent on costlier bank and Non-Banking Financial Company (NBFC) lending for project funding, as they cannot launch a project until all approvals have been received from the relevant authorities. However, this clause has been diluted from its earlier form of depositing 70% into an escrow account.

Developers will need to streamline operations to meet some clauses, particularly over the timely delivery of projects. With this measure encouraging timely completions, the bill is likely to lure investors and end-users with greater faith that the developer will deliver the property to the promised specification. In addition, misleading project advertisements may result in punitive action by the state. The clause regarding criminal prosecution may deter some of the smaller developers who are somewhat unprofessional from launching new projects with the promise of speed and precautions. As a result, this bill could help inculcate the developer community with a professional attitude.

The bill may help to reduce money laundering through real estate by keeping a trace of the money trail through organised brokerage, as it will be compulsory for real estate agents to have a licence. Banks and financial institutions will now become more confident in lending money to this sector due to the lower risk of misuse of funds. It might help the real estate industry towards a paradigm shift in terms of transparency and consumer friendliness, increasing India’s transparency score, and it could usher in a more mature Indian real estate market, helping everyone related to it in the long term. However, the possibility of an increase in project cost on the back of transparency measures without a single-window clearance and the absence of focus in attracting FDI might act as subduing parameters going forward.

About the author
Sujash Bera is the Assistant Manager, Research for Jones Lang LaSalle in India, based in Kolkata.

Posted in India, Policy Impact, Public Policy | No Comments »

Shake Up Their Workplace!

June 17th, 2013 by Anne Thoraval

In increasingly competitive economies, the workplace is now seen as one of the crucial pieces for improving productivity.

How productivity is being tackled is changing. If productivity is a function of ‘reducing inputs’ over ‘increasing outputs’, the first part of the equation is still often addressed first. For example, Australia resource giant BHP Billiton’s CEO Andrew Mackenzie recently pledged to “unlock more cash from [their] installed capacity by pulling the productivity lever very hard.” However, ways to increase outputs are now being paid a lot more attention. In particular, attracting and retaining the best talent and providing them with an environment where they will strive and grow (i.e. work efficiently and effectively) is recognised as a major competitive asset.

At the same time, the productivity imperative is increasingly intermingled with sustainability considerations. This is the case at the Toyota Corporation, where one of the support functions is a Productivity & Environment Group of which the head reports to the CEO. In addition to a proven track record of cost savings (reduced energy expenditure, fewer sick leaves, etc.), the payback of green initiatives extends to boosting worker productivity. “Numerous studies have shown that employees enjoy work more and are more productive when they see their companies acting in a socially-responsible manner,” said Dan Probst, Global Chairman of Energy and Sustainability Services at Jones Lang LaSalle.

In this context, corporate real estate (CRE) teams are mandated to participate more than ever to their overall organisation’s productivity endeavours. While enhancing the productivity of the real estate portfolio emerged in our 2011 report as a best-in-class companies feature, the findings of our Global Corporate Real Estate 2013 survey show this is now a high expectation across the board.

C-suites are also awakening to the fact that, beyond the workplace, CRE decisions have the ability to improve people, business and asset productivity. Workplace transformation projects are an opportunity not to be missed to touch all four components in a coordinated, instead of isolated, manner. Close collaboration with other corporate functions will help CRE teams achieve optimum results.


Source: Jones Lang LaSalle, Risks Ahead- Global Corporate Real Estate Trends 2013

In Asia Pacific (APAC) there is clearly room for improvement. As many as “40% of employees feel there isn’t enough collaboration in their workplaces,” according to a Microsoft survey in APAC in 2013. While new workplace philosophies such as Activity Based Working are being embraced by more Australian companies, only cutting-edge companies have so far demonstrated an experimental streak in this regard in the rest of APAC. India’s leading travel planning and search engine is one of these. With its office space accommodating impromptu gaming breaks, ixigo.com has just been named one of the top 15 ‘Awesome Startup Workplaces’ to work for in India. Time for the C-suite to shake up their workplaces!

Read more on how workplace trends play out in the region in our Global Corporate Real Estate Survey focus reports: Australia, Japan, and soon India.

About the author
Anne Thoraval is a Director, in charge of Corporate Research Asia Pacific.

Posted in Asia Pacific, Corporate Real Estate | No Comments »

Virtual Store Resembles In-store Shopping Experience

June 14th, 2013 by Cathie Chung

As I was travelling to work the other day, my attention was caught by a giant poster plastered along a wall at the Admiralty MTR station displaying lots of products with price tags and quick response (QR) codes. The poster was in fact a virtual store for Pricerite, a large-scale household goods retailer in Hong Kong. This virtual store allows passers-by to shop for displayed items where there is no actual store and without having to queue at a cashier – with the added bonus of delivery, so there is no need to lug around shopping bags on the crowded MTR at rush-hour! Customers can use their smartphones to scan the QR product code, pay for the items in their virtual cart, and have the items delivered to their doors within hours.

Pricerite Express Virtual Store at Admiralty Station, Hong Kong

But how is a virtual store different from your traditional online shopping experience? Yes, online shopping is really convenient; however, mobile devices limit the number of products that can be seen due to the screen size. On the other hand, QR codes in the virtual store enable a range of products to be displayed to catch consumer attention. Also, it’s easier to find items without keyword searching the online store, which can be a hit or miss game. Showing products on “shelves” in a virtual store also makes virtual store shopping more like browsing in a real shop.

While these types of virtual stores are still not that common in Hong Kong, they can be found in many other cities around the world like Seoul, Taiwan, Tokyo, Chicago and Toronto. (see this video for some virtual stores around the world). They are mainly located in high foot-traffic areas, such as subway stations, and can add shopping fun to bored commuters waiting for trains. Virtual stores are also more often used by supermarkets to provide shopping options for consumers to purchase without the hassle of lining up at the cashiers.

I believe that virtual stores could become the next big fad in Hong Kong, where retail rents can be very expensive. This form of retailing does not require a proper shop to operate yet it can still capture strong traffic flows. It particular, it allows high volume retailers of consumable goods to increase their presence, especially in high traffic areas, at the cost of advertising instead of the cost of real estate. And for landlords, virtual stores allow them to increase advertising revenue while providing a service to their customers. Furthermore, Hong Kong’s widespread use of smartphones also makes virtual stores feasible. According to the Office of the Government Chief Information Officer, Hong Kong’s smartphone penetration rate of 61% (as of 2011) is the second highest in the world. I believe that virtual stores have provided an opportunity for retailers and landlords to connect online and offline shopping for a seamless customer experience.

About the author
Cathie Chung is the Local Director, Consulting in Jones Lang LaSalle Hong Kong.

Posted in Hong Kong, Retail Research | No Comments »

Is This The End Of The Department Store Era In China?

June 13th, 2013 by Evian Zhu

2012 may mark the end of the department store era in China. Consider that at end-2009, freestanding department stores accounted for about half the retail stock in China’s top 20 markets. By end-2012, this had fallen to less than a third. Also, according to the China Commerce Association, total sales growth of 81 medium and large sized department stores slowed to 8.9% y-o-y in 2012, down from an average 16.5% y-o-y growth from 2006 to 2001. Today, in Beijing, Shanghai, and Chengdu, individual store level sales show only the top two or three department stores are still generating positive y-o-y sales growth; the rest were negative. Closures have started to happen in markets like Shanghai (No.1 Department Store), Beijing, and Wuxi (Grand Ocean Department Store). The shift from the “OEM” model to the “ODM” (original design manufacturer) in the fashion industry has gone hand in hand with stronger, more recognisable brands, who often have their own single-brand store network. The rising young consumer of today shops for strong brands in shopping malls, not in department stores. Many of today’s department stores are so undifferentiated that it is hard to tell one from another.

But that doesn’t mean all department stores are now obsolete. The future will almost certainly contain fewer department stores than we have today, but we see several trends which should prolong the life of the stronger players in the market and strengthen their positions:

1. Adding more leisure options to existing projects. In order to entice customers to linger longer and spend more, the F&B and entertainment space is expanded, and the clothing floor space reduced.

2. Finding a unique market positioning. Some department stores are adopting a special theme, such as Japanese clothing, or kid’s products, which are aimed at a specific market segment. Suzhou Izumiya and Shanghai’s Takashimaya are examples. These differ from traditional department stores which serve a broad, unfocused market. In the future we also see a role for department stores to focus on older, mature consumers, which have increasingly high spending power.

3. Moving from offline to online. Department stores are one of the most vulnerable retail categories to e-commerce, due to the heavy concentration of small apparel brands. Traditional operators Wangfujing and Intime have launched online stores to tap into the e-commerce boom.

4. Consumer loyalty programs. Membership cards managed by department store operators are able to increase the loyalty of the customers who purchase in same store or same chain of stores. For their loyalty, customers collect bonus points and special free offerings.

5. Introducing more merchandise direct sales and private labels. The China department store model is based on leasing concession space to the brands and the operator earns all income from rent. Meanwhile, merchandise direct sales are more common in Europe and the US and offer the opportunity for the DS operator to have control over pricing, and obtain better operating margins. However, increasing the amount sold via direct sale requires a professional buying team and is challenging to implement in the short term and remains rare in China except for operators like Lane Crawford.

About the author
Evian Zhu is Assistant Manager in Jones Lang LaSalle’s research team in China, based in Shanghai.

Posted in China, Retail Research | No Comments »

Dissecting The Role Of Real Estate Regulator In India

June 12th, 2013 by Karan Khetan

The Central Government Cabinet approved the Real Estate (Regulation & Development) Bill on 5 June 2013. The aim of the bill is to create a Real Estate Regulatory Authority and an Appellate Tribunal that will act as a watchdog for the housing sector, primarily towards protecting consumer interests while creating an alternative redress mechanism for any disputes that may arise. The bill demands greater disclosure from the developer community and a higher level of project accountability to remove the information asymmetries from the housing market.

Like the US, where local city laws hold primacy over county and national laws in matters relating to real estate, land and urban planning, including housing, is a state subject in India. In a quasi-federal state like India, states act as independent, autonomous agents in respect of subjects that are under their purview. While the US does not have a single window regulator, this bill seeks to remove this obstacle by letting the states set up their respective Regulatory Authority. Another major positive step is the compulsory registration of real estate agents, which is likely to provide another level of protection to buyers while also preventing concerns regarding money laundering by the non-organised broker community. A major bill provision is the standardisation of area measurement, with carpet area to be the measure when this bill is enacted.

Effective legislation, judicial activism and regulatory mechanism together lead to a vibrant industry with greater emphasis on protecting consumer interests. With a literally exploding housing demand, there was a definite need to bring in greater disclosure norms. Developers would need to provide the status of all approvals as well as sanctioned plans to buyers and will not be able to sell their project without obtaining the required approvals. The bill has also sought to ensure that the buyer’s payment is utilised for the development of the particular project by necessitating the creation of an escrow account where the customer advances paid will be used only for that project’s completion. This limit has been revised from 70% earlier to 70% or less as decided by the respective states. The bill also seeks to make the developer responsible for adhering to the timelines and specifications committed to for project completion.

There is also a need to analyse if certain inherent challenges facing the housing sector have been given a miss in this draft. At first glance, the government is yet to streamline the approval process, which significantly slows down the project launch date and adds to the cost burden of the developer. There is no clarity on which law will have precedence in the case of a dispute between the Central Government and state policies. The idea of fostering greater transparency may come at the cost of housing projects becoming more expensive if the approval process adds to the holding cost of the developer. That the regulator will be effective and that this is a positive step is not debatable. However, the extent of effectiveness and the implementation at the state level are possible hindrances going forward.

About the author
Karan Khetan is the Senior Analyst for Jones Lang LaSalle in India, based in Mumbai.

Posted in India, Policy Impact, Public Policy | No Comments »

Importance Of Infrastructure In Sustaining The Philippine Real Estate Growth

June 11th, 2013 by Janlo de los Reyes

In general, infrastructure projects have a significant impact on the economy and are usually associated with physical development. These serve as a base for other economic activities, providing cross-sectoral benefits in the economy – including the property sector.

In particular, the presence of nearby infrastructure generally increases the attractiveness of any development. One general benefit of infrastructure to property development is enhanced accessibility. Accessibility has increasingly become a competitive edge for property developments in the country. The premium on accessibility is underpinned by the growing culture of convenience and efficiency, and reflected in part in the emergence of concepts such as live-work-play and mixed-used districts. This is evident in the growth of property developments along or near key infrastructure projects. In recent years, property developers have likewise integrated infrastructure facilities in their respective development plans. Not only do these generate traffic, which is crucial in creating and sustaining critical mass that may support these developments, but also it widens the catchment area of property developments. Formerly latent markets in the periphery areas may now be tapped, as ease of travel have bridged the geographical gap between the different areas in the metropolis. Altogether, these benefits from infrastructure influence property values, effecting price appreciation in adjacent areas.

Conversely, there are also drawbacks to these infrastructure projects especially on the property market. As developments cluster around these infrastructure projects, the increasing development density and traffic may outpace the capacities of these facilities and outweigh its benefits. A related by-product of this increased traffic is the increased noise and pollution, which may affect the quality of the environment and the attractiveness of property developments.

Unfortunately, the Philippines has been noted for its lack of infrastructures. Despite its relative robust economic growth in recent years, the country is considered a laggard among its Asian peers in terms of investments in infrastructures. According to the latest Global Competitiveness Report by the World Economic Forum, the country ranked 98 (out of 144 countries) in terms of the overall quality of infrastructures. The report also notes that this inadequacy in infrastructure is the third most problematic factor for doing business in the country. In response, the Philippine government has adopted a Private-Public-Partnerships (PPP) model to promote infrastructure projects that would support development in the country. Notable infrastructure projects that have been awarded include the North Luzon Expressway and South Luzon Expressway Connector Road and the Ninoy Aquino International Airport Expressway Project. If completed, these projects would decongest existing road and create new ones that may spur property development in various areas of Metro Manila.

While the property upswing is a welcome boon to the economy the lack of infrastructures in the country may impede the long-term growth of the property sector. Thus, it is imperative that the property sector be accompanied by the masterful placement of infrastructure if the Philippine property market growth prospects are to be maintained.

About the author
Janlo de los Reyes is the Senior Research Analyst for Jones Lang LaSalle in the Philippines.

Posted in Infrastructure, Philippines | No Comments »

Implication of E-commerce In Shopping Mall Positioning

June 10th, 2013 by Silvia Zeng

Today, shopping malls and department stores in China are not only competing against each other, but also facing changes in consumption patterns that are shifting purchases from traditional retailing to e-commerce. Online retail offers a competitive advantage, including price, selection, distribution and convenience.

The fear that e-commerce would erode the sales of China’s broader retail industry is greater than ever, and that fear is driven by the thriving pace of online shopping sales growth of 66.5% y-o-y over 2012, according to China Internet Network Information Center (CINIC). That same period was also a challenging time for many shopping malls and department stores, some of which saw a decline in both rental growth and sales growth because of the overall slower growth in retail sales and the increased competition from new shopping malls. This competition will continue to increase with the large supply of new shopping malls in the coming years. Take south China as example – there may be as much as 1.5 and 2.2 million sqm of new retail space coming onto Guangzhou and Shenzhen, respectively, over the next five years.

A 2012 study by CINIC showed the shopping habits of China’s online consumers: 81.8% of the respondents said that they have purchased garments last half year through online shops; 31.6% and 29.6% of them have picked daily goods and IT-related products (Chart 1). This illustrates the question of whether anchor or semi-anchor tenants in shopping malls — many of whom are department stores, hypermarkets and IT and home appliance stores — will suffer deteriorating sales as eCommerce grows.

Chart 1

Source: CINIC

One view is that a higher percentage of lifestyle oriented tenants in shopping centres could be a solution. However, while F&B, cinemas, skating rinks and children’s playgrounds are good attractions to drive foot traffic, such occupants pay relatively low rents compared with general retailers. Thus, several domestic property developers becoming more vertically integrated to boost revenue streams and are establishing their own entertainment businesses instead of relying only on rental income. A notable example is Wanda. This famous Chinese developer built their own brand of IMAX cinema, KTV and department store and purchased a major US-based cinema chain to not only to capture a larger share of the revenue but also to secure occupancy in their new malls. However, this type of affiliated business model is reserved for developers who own a large retail asset portfolio and can benefit from economies of scale.

Another area of focus is on differentiation in shopping malls and providing an experience that cannot be easily matched online. The profile of online shoppers gives some clues as to the areas where eCommerce will be a source of the greatest competition. For example, it was found that over 60% of online shoppers are aged between 18-30; 41% are white-collar workers; and only 12.9% come from the highest-income group of over RMB 8,000 per month, from CINIC’s survey. This suggests that retail developers could feature unique and upscale lifestyle-experience positioning in their shopping malls through tenant-mix and architectural design to cater to those who are not currently shopping online and create differentiation between the existing brick-and-mortar players and their online counterparts.

About the author
Silvia Zeng is the Senior Manager of Research for Jones Lang LaSalle in Guangzhou, China.

Posted in China, Retail Research | No Comments »

How Liquid Is Investment In The Australian Industrial Sector?

June 6th, 2013 by Nicholas Crothers

A liquid asset is one that can be sold swiftly with minimal loss of value. Therefore, a liquid market is one that always has ready and willing buyers and sellers. That is, liquidity can be characterised by a high level of trading activity, often referred to as market depth. The lower the liquidity risk of an asset, the lower the expected return on the asset or the higher it is priced. It is safer to invest in liquid assets than illiquid assets as it is easier to get your money out of the investment.

There is a perception that industrial property is a less liquid asset class than office or retail property. This perception has been created because the average annual transaction volume in the industrial sector is a lot lower than both office and retail. So, how liquid is an investment in the Australian industrial property sector?

One way we can measure liquidity is by using a simple stock turnover analysis. That is, the total value of major sales as a proportion of the estimated total value of capital.

In 2012 Jones Lang LaSalle recorded AUD 2.40 billion in major industrial asset sales. Our measure of the value of capital stock in the major monitored* city industrial markets in 2012 was AUD 29.13 billion. This equates to stock turnover of 8.25%.

While the vast majority of industrial sales in 2012 were in Sydney (37.7%), and Melbourne also accounted for a large share of transaction volumes (18.8%), these two markets had the lowest turnover ratios in 2012 (7.2% and 6.8% respectively).

Sales volumes in Brisbane were very strong in 2012, accounting for 23.7% of total sales. As a result, Brisbane recorded a turnover ratio of 10.1%. Sales in Perth were also solid in 2012 at 12.9% of national sales, resulting in a turnover ratio of 10.3%. Adelaide accounted for 6.8% of sales, well above its market share of capital stock, and therefore had a high stock turnover ratio of 12.5%.

How does the industrial sector compare to the much larger CBD office sector?

In 2012 we recorded AUD 7.43 billion of major office sales in the combined CBD markets. Our measure of the value of capital stock in CBD office markets in 2012 was AUD 114.64 billion. Turnover of stock in 2012 equated to 6.5%.

What does it all mean? Investors in commercial property should consider the liquidity characteristics of the property sector and individual market or city they are considering investing in. The industrial property sector in 2012 was slightly more liquid than the CBD office markets combined (when using stock turnover to measure liquidity).

It is clear from the high level of transactions in 2012 that there is very good depth in the investment market for vendors of industrial property. The high entry yields on offer in the sector relative to other property classes and positive rental growth outlook will continue to attract strong investor interest in 2013.

* Jones Lang LaSalle Research monitors metropolitan industrial markets in Sydney, Melbourne, Brisbane, Adelaide and Perth.

About the author
Nicholas Crothers the Director of Industrial Research for Jones Lang LaSalle in Australia, based in Sydney.

Posted in Capital Markets, Industrial Research, Investment Research, Transaction Volumes | No Comments »

AEC 2015 And Its Impact On ASEAN Real Estate

June 5th, 2013 by Dr. Chua Yang Liang

The Association of South East Asian Nations (ASEAN) comprises ten diverse nations with a myriad of languages and cultures, and has been around since 1967. In November 2007, the ASEAN leaders adopted the ASEAN Economic Blueprint – a master plan to guide the integration of the regional economies into a single market and production base – and agreed to the establishment of the ASEAN Economic Community (AEC) by 2015. If this is achieved, it provides businesses with seamless access to a market of over 600 million people – 8% of the world’s population – living in a land area of 4.46 million sq km. From the real estate perspective, this integration could improve regional connectivity in terms of investment in roads and rail transport networks, and further the growth of the local urban development and real estate markets.

The AEC goal of enhancing the mobility of skilled labour will be the catalyst for the exchange of best practices across ASEAN. Urban design and development will benefit from these exchanges. Greater innovation is expected as the mature cities move up the value chain, as rising pressure from limited and costly land and labour resources force these mature cities to increase their productivity in terms of construction processes and building efficiency. The construction industry will rely more on labour sourced within rather than outside ASEAN.

The primary concern of companies and investors is to maximise profits and reduce costs. Therefore, areas with lower production costs will draw lower-end production away from costlier regions. The recent outflow of industrial production from China into the emerging markets of Myanmar, Vietnam and Cambodia and the outsourcing of backroom support functions from Singapore to the Philippines are some examples. The industrial assets in higher-cost regions such as Malaysia, Thailand and Singapore will undergo adaptive reuse if not redevelopment, focusing on providing higher value-added products and services while the new industrial estates in the Cambodia, Laos, Myanmar and Vietnam will support lower-end production. As more manufacturers relocate to ASEAN, the demand for industrial and logistic properties should consequentially increase.

Should such a single production base prove successful, the elimination of tariffs on goods and services within ASEAN members will increase the region’s overall economic growth and wealth. The next change could come from the shifting consumption pattern accompanying higher disposable income. There will be more manufacturing and services as investors take advantage of the tariff free region and consumption within ASEAN rises. We already see this happening, especially in Indonesia. The retail market is undergoing a transformation, as consumers armed with higher income are demanding more of a lifestyle-centric shopping experience.

Lastly, with greater ease of capital flow and investments, the level of real estate investment activity is expected to rise in the untapped South East Asian markets as investor appetite grows. The level of capital flow in ASEAN is also likely to rise as and when regulatory barriers are removed.

About the author
Yang Liang Chua is Head of Research for Singapore and South East Asia at Jones Lang LaSalle.

Posted in Public Policy, South East Asia | No Comments »

Investors Eyeing Fringe Areas Of Beijing

June 4th, 2013 by Marcos Chan

It is always interesting to look at different stages of market development in China’s office markets. If you tour around many of the Tier 2 cities, you would probably see local governments paying great efforts trying to create CBDs and ‘centralisation’ is the key theme. In more mature markets like Beijing and Shanghai, governments are pushing for ‘decentralisation’ as they need extra space and infrastructure to accommodate the growing economies or else they will be putting caps on growth potential.

Beijing, where most office submarkets are currently running on low single-digit vacancy levels, is pushing for the opening up of more future development opportunities in fringe locations. There will be an extension of the current CBD to the east of the China World complex but this will only comprise about 2.5 mil sqm of GFA; not enough to build a more sustainable commercial land bank for Beijing!

There are plans to open up other emerging clusters and heat is building up, particularly in the southern part of Beijing. As part of the government’s blueprint to develop the south of the city, Lize, within the 3rd Ring Road on the south-west side of Beijing, has been earmarked as a new Financial Business District (FBD) due to its close proximity to the existing Finance Street cluster as well as various railway hubs. I don’t plan to give great details about the Lize FBD here but it will yield a maximum potential of 9 million sqm of total GFA over the next decade or two and we estimate no more than half of the space will be developed for office space and the rest for retail, hotel and other commercial usage

I have been hearing people ask about the potential source of demand for all of this extra space, not just in Lize but also in other fringe areas of Beijing. This huge quantum of space will not be filled overnight, but it is the broad agenda of the new Central government to push for industrial reform and to continuously open up competition for China’s service sector. This suggests a deep well of future demand for both new and upgraded office space. Beijing as the capital city will likely remain a preferred option for many local and foreign enterprises and I see the need for the city to build a land bank to facilitate future growth. Indeed, a big portion of the space sold in Lize thus far has been reserved for SOE’s self-occupation. If we take a look back, there were also concerns about the supply boom in Beijing back in 08/09 but what followed was a historically large amount of absorption.

I think experienced investors also hold positive views towards Lize and some other emerging submarkets in Beijing. The lack of willing sellers and hence investible assets in the core of Beijing are pushing institutional investors to research opportunities in fringe locations. I am seeing more research enquiries coming in for these locations and I expect this will continue to be the case going forward.

About the author
Marcos Chan is the Head of Research for Jones Lang LaSalle in North China, based in Beijing.

Posted in China, Land/Office | No Comments »

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