Executive Briefings

50 Chinese Cities to Watch Over Next Decade in Such Sectors as Retail and Logistics

A report from Jones Lang LaSalle, China50: Fifty Real Estate Markets that Matter, highlights the opportunities for corporate real estate investors, developers, retailers, logistics companies and hotel operators in 50 secondary and tertiary cities across the country.   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, more than 80 million square meters of modern retail and nearly 30 million square meters 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 percent of overall global economic growth over the next decade and China50 contains all of the world's 10 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."

"As the volume of tradeable 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," Fung said.

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."

The report is available by clicking here.

Source: Jones Lang LaSalle

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, more than 80 million square meters of modern retail and nearly 30 million square meters 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 percent of overall global economic growth over the next decade and China50 contains all of the world's 10 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."

"As the volume of tradeable 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," Fung said.

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."

The report is available by clicking here.

Source: Jones Lang LaSalle