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Table of Content
Ⅰ. Social-Political Context
Ⅱ. State of Economy
Ⅲ. Planning Feature
Ⅳ. Property Market
Ⅴ. Conclusion
Ⅰ. Social-Political Context
Beijing, as the capital of People’s Republic of China, has
outstood itself as the political, economic, cultural and
transportation center of the country along with the tremendous
rocket of China’s comprehensive power within decades.
With a large population of 14.5 million (late 2003), over
2 million flowing people every year and a vast expanse of
16,800 sq.km (National Bureau of Statistics of China), Beijing
plays a more and more important role not just in the geographic
manner.
A total length of 5,500 kilometers of city-road, a capacity
for over 3 million passengers per year by rail to most cities
in China, and over 200 domestic and international airlines
opened until 2003, Beijing is of highly convenient access
to people both at home and abroad which, simultaneously,
ascends Beijing to be one of the busiest cities in the world.
(Beijing Municipal Commission of Urban Planning, 2003)
Vigorous in comprehensive industries, Beijing has kept
a steady economic growth for over ten years and a surge
and subside respectively in enjoyment consumption and sustaining
consumption among the public has been witnessed.
Efforts have been made by the city and its people to open
Beijing wider to the outside and absorb advanced experience
from various parts of the world with the aim to develop
itself in a more harmonious and efficient way. Evidence
could be found in the updated planning policies that are
more rational and market-lead.
In addition, Beijing is in the leading position among other
cities in the country for boasting the largest scientific
research center and the most advanced education system,
by which it continuously absorbs and provides a rising number
of well-educated people needed in the progressing work in
society.
Therefore, Beijing undoubtedly will become one of the modern
international metropolises that have profound effect in
global context in the near future.
Ⅱ. State of Economy
In back of the general economic recovery worldwide, China
starting from 2004 has entered into a new phase of overall
growth. The substantial startup of Olympic-related development
in Beijing will greatly push the citywide investments to
a new high.
Catching figures during the first half year of 2004:
◆ RMB 191 billion GDP, an increase of 15.4%, 5.7% higher
than that of China as a whole
◆ RMB 37.8 billion revenue, an increase of 25.3% year-on-year
◆ RMB 77.2 billion FAI, a rise of 18.2% year-on-year
◆ US$ 4.5 billion export, a rise of 38.4% year-on-year
◆ US$ 1.7 billion utilized foreign capital, a surge of 62.1%
and 56.3% than that of 2003 and 2004 respectively
◆ RMB 7,836.4 disposable income per person, a rise of 11.3%
(National Bureau of Statistics of China, 2004)
Noticeable features of Beijing’s economy:
1. The 13.4% GDP growth rate in the first quarter of 2004
has peaked among the same period in ten years. Since 1999,
a high level GDP growth rate around 10% every year has been
kept, and its fluctuation controlled within 0.8% on year
basis.
2. The tertiary industry has realized a rise of 14.2% for
the first half of year 2004, a stirring recovery after the
strike of SARS in 2003. Meanwhile, a healthy surge of 19.1%
of value-added industrial output has taken place.
3. In result of the macro control implemented early this
year, the increase rate of investment on property development
for the first six months has subsided by 6.6% compared to
that from January to May this year.
4. The 19.3% rise on retail of social commodity shows the
steady enhancement of people’s purchase power. A production
of 239,000 vehicles in automobile industry and a sale of
more than 6.59 million sq.m. of commodity housing all displayed
the enthusiasm of public investment involvement.
(National Bureau of Statistics of China, 2004)
Ⅲ. Planning Feature
After China’s entry into WTO, Beijing has become an international-oriented
market ever since. Beijing Municipal Commission of Urban
Planning, acting under the central government’s level since
1983, has been working on the establishment and implementation
of planning policies for a healthy performance of the market.
Planning focuses on commercial development:
▲To upgrade three areas: the central commercial center,
CBD and Zhongguancun Science Park
▲To prosper three circles: the retail centers around the
Third Circle Road, the large-scale professional market centers
around the Fourth Circle Road as well as the large-scale
multifunctional shopping centers and modern logistic distribution
centers around the First Circle Highway
▲To develop ten satellite cities around Beijing with diverse
commercial systems
▲To build up ten commercial streets (areas) with varied
features
▲To improve four hundred commercial centers of community
level
(Beijing Municipal Commission of Urban Planning, 2003)
Overview of comprehensive planning schemes for Beijing
commercial centers
(Source: Beijing Investment Platform Website)
(Source: Jones Lang LaSalle, Mar2004)
All the above plans were made to develop the city in an
inter-linked manner with the purpose to enlarge the domestic
demand and eventually enhance people’s living standard in
general, which at the same time release more space and offer
new directions for potential property investments.
Planning influences on property industry:
1. Big construction projects on governmental administration
buildings and grand cultural facilities are to be conducted
to enhance Beijing’s role as the political and cultural
image of the whole country.
2. Large amount of industrial factories and warehouses
in central areas are to be relocated to outskirts, which
will give space for development of tertiary industry including
property development.
3. Population is to be decentralized to new developed satellite
cities with favorable re-housing policies, which will raise
public investment in residential property both from the
sides of ordinary people and property developers.
4. Construction on part of the Olympic sports centers and
venues are to be started, meanwhile old and dangerous houses
will be rebuilt on large scale. Therefore, foreign investments
will be of great need.
Ⅳ. Property Market
●Demand for office property remains strong
●Rent for residential property has a slight decline
●Olympic-related investment forms a rising hotspot
●Tourism is to recover after SARS
Office
The office leasing market has been active from early 2004
as a result of continued strong demand in this regard. Boosted
by impressive performance in China, multinational companies
in professional and financial sectors, in course of vigorous
expansion, were seeking for Grade A office space especially
in eastern Beijing. Local companies also showed great interest
in office accommodations for upgrade, which has been an
apparent tendency since 2002.
| Due to solid market demand and lack of
new completions, the overall vacancy rate for Grade
A offices has decreased to 11.4% from 14% in the first
quarter of 2004. While, the average rental rate has
experienced a slight rise to US$22.5 per sq.m. per month.
|
(Cushman & Wakefield, July2004) |
A total of eleven
new office developments representing 1,554,000 sq.m.
are currently under construction which indicates a high
supply in the next three years. However, this supply-side
pressure is likely to be relieved by strong inflow of
foreign commercial entities and higher level of economic
activities of domestic enterprises driven by Beijing’s
prosperous market.
(FPDSavills China, Aug2004) |
(Source: Colliers International, Oct2004) |
The residential leasing market was also active during the
first three quarters this year while multinationals continued
to bring in large amount of potential tenants, many of whom
tended to move in with families. The market also witnessed
a noticeable surge of Japanese and Korean expatriates this
year, an increase of 40% Korean Students in international
schools.
Apartment projects
being centrally located and recently finished became
considerably popular and the sale market for villas
also prospers among locals. In echo with the intensive
demand, the average vacancy rate in high-end residential
market had dropped to 22%, a 6% subside compared to
early this year.
(FPDSavills China, Aug2004) |
(Source: Jones Lang LaSalle, Mar2004) |
Taking into account of the China’s governmental tightening
policies on property bank loans introduced late April and
a high supply of residential space including around 140,000
high-end apartments in the coming three years, severe competition
is expected to take place which tends to put both price
and rents under downward pressure for sometime to come (FPDSavills
China, Aug2004). However, as the stable small growth of
population and continual high-educated international immigration
flow, the future demand for high quality residential property
will remain large.
Olympic
By 2008, a total amount of RMB 280 billion (Jones Lang LaSalle,
Aug2004) will be invested on Olympic-related projects, a
large proportion of which consist of hospitals, retail projects,
as well as education and sports centers.
| Therefore, encouraging
policies and activities are sure to be introduced and
undertaken for the government to attract significant
investments both at home and abroad, which is also considered
as a sufficient reason for sustained accessions of multinationals.
Worldwide brand like Cartier and Starbucks all seek
for expansion and more control of Blueprint vision of
2008 Olympic park in Beijing |
(Source: Beijing Investment Platform Website) |
investments in Beijing, which are clear signs of strong
confidence towards the city’s potential prosperity on the
side of investors. Hence the 2008 Beijing Olympic should
be regarded as an unprecedented opportunity in terms of
financial investments.
Tourism
Rich in tourist resources, Beijing has long attracted tourists
all over the world with its abundant cultural-politic heritage
and its unique charm. For 9 successive years, it has received
over 2 million oversea tourists per year.
With the integral improvement of transportation network
in Beijing by 2008 and its own effort to rebuild its public
image as an international tourist destination after the
attack of SARS, Beijing is very likely to experience a new
boom in tourist industry and therefore tourist-related property
development is also likely to be well encouraged.
Ⅴ. Conclusion
Based on the above study from several crucial aspects what
guide and affect property investment, it is concluded that
Beijing is booming not only in economic but also in political,
social as well as cultural context and will continue this
trend in the coming few years. Although the government has
made effort on cooling down the market a little bit this
year and it really takes effect, it was for the purpose
to regulate the practice in this industry to be more professional
and healthy which will benefit both the city and investors
in the long run. Therefore, numerous investment opportunities
exist on this land and you are strongly recommended not
to let them go.
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