World Winning Cities China Master Presentation


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  • World Winning Cities China Master Presentation

    1. 1. World Winning Cities World Winning Cities Programme China: Emerging City Winners
    2. 3. World Winning Cities in China
    3. 4. <ul><li>China Context </li></ul><ul><ul><li>Economy </li></ul></ul><ul><ul><li>Investment </li></ul></ul><ul><li>China 30 </li></ul><ul><li>China Logistics </li></ul><ul><li>China Retail </li></ul><ul><li>City Cobwebs </li></ul>China: Emerging City Winners
    4. 5. Changing Perceptions Some things you may know about China…. … ..and some things you probably didn't
    5. 6. The Western View of Chinese Markets <ul><li>Too much to choose from – where do you start? </li></ul><ul><li>Nothing familiar – where are the sale and leasebacks and the REITs </li></ul><ul><li>Partnerships – necessary, but difficult </li></ul><ul><li>The banks are bankrupt </li></ul><ul><li>There is no management skill and few trained staff </li></ul><ul><li>They want long term investment monies not short term real estate investment </li></ul>
    6. 7. The Chinese View of Western Approach <ul><li>Strengths: </li></ul><ul><li>Prudent in investment decisions making </li></ul><ul><li>Good at risk management </li></ul><ul><li>Weaknesses </li></ul><ul><li>Slow to respond to Chinese partners proposals </li></ul><ul><li>Require Chinese partner to do too much time consuming paperwork </li></ul><ul><li>Eager to have final say on everything, but fail to understand the market </li></ul><ul><li>Slow to amend marketing strategy in a rapidly changing market </li></ul><ul><li>Don’t understand gov’t approval process & unwilling to work within it </li></ul>
    7. 8. But China has come far: The History of Property Investment 1988 1989 1990 1991 1997 2005 2006 P&G enter Market/ Land lease system established Shanghai Centre - First real property project Macquarie GPA deal kicks off hard asset investment 1988 1990 2005 The property market since open policy 2003 Asian Financial crisis scares investors away 1997-8
    8. 9. Case Study: Shanghai Centre (Completed 1990) <ul><li>First international property investment deal </li></ul><ul><li>AIG, Kajima, Portman </li></ul><ul><li>5-star hotel, serviced apt, grade A office, retail </li></ul><ul><li>Hank Greenberg AIG & John Portman, Portman Group personally involved </li></ul>
    9. 10. Case Study: Plaza 66 (Completed 2001) <ul><li>2001 – Phase 1; 2007 – Phase 2 </li></ul><ul><li>66 Floors of MNC tenants </li></ul><ul><li>5 Floors of Luxury brands </li></ul><ul><li>Vast majority of Chinese couldn’t buy anything in this center </li></ul><ul><li>Is it profitable, or just a ‘showcase’? </li></ul><ul><li>Hang Lung hopes to roll out 10 more mixed use projects over the next 3 years </li></ul>
    10. 11. Case Study: Morgan Stanley Deal <ul><li>A very difficult & time consuming deal, but showed perseverance </li></ul><ul><li>Strata title building, poorly managed & positioned </li></ul><ul><li>Morgan Stanley & local partner consolidate strata title ownership </li></ul><ul><li>Have been able to double rents, reposition retail </li></ul><ul><li>Just signed key anchor tenants – insurance group (8,000 sqm) </li></ul>
    11. 12. Weight of money targeting China <ul><li>International funds have announced more than US$ 30bn of investment targeting China </li></ul><ul><li>Majority of funds are from Chinese, Hong Kong, Taiwanese & Singaporean investors </li></ul><ul><li>‘ Western’ money continues to principally target highly competitive markets in Yangtze Delta – especially Shanghai. Some interest in Beijing. </li></ul><ul><li>‘ Asian’ cross-border investors continue to target Guangdong and Tier II and III cities – first to enter strong growth markets. </li></ul><ul><li>Tier II and III cities only offer development opportunities </li></ul>Weight of Money Targeting China
    12. 13. Foreign Investors in China
    13. 14. 2005 ‘Prime’ Real Estate Investment in China Total > US$ 5.5bn Beijing Tianjin Shanghai Hangzhou Nanjing Other Guangzhou/ Guangdong
    14. 15. China - Yield Convergence?
    15. 16. <ul><li>China Context </li></ul><ul><ul><li>Economy </li></ul></ul><ul><ul><li>Investment </li></ul></ul><ul><li>China 30 </li></ul><ul><li>China Logistics </li></ul><ul><li>China Retail </li></ul>China: Emerging City Winners
    16. 17. China’s Cities Hierarchy Shanghai, Beijing, Hong Kong Guangzhou, Shenzhen, Macau Chongqing, Chengdu, Tianjin Wuhan, Xi’an, Qingdao, Suzhou Shenyang, Hangzhou, Nanjing, Dalian, Dongguan, Xiamen Harbin, Zhengzhou, Fuzhou Nanning, Wuxi, Changsha Kunming, Jinan, Ningbo, Nanchang Hefei, Changzhou, Changchun II III III II I
    17. 18. Traditional Focus of Economic Activity <ul><li>B ohai Economic Zone </li></ul><ul><li>Administrative Capital </li></ul><ul><li>Science & Technology </li></ul><ul><li>Higher Education </li></ul><ul><li>Culture/Tourism </li></ul><ul><li>Olympics 2008 </li></ul><ul><li>Pearl River Delta </li></ul><ul><li>Trade capital </li></ul><ul><li>Manufacturing FDI </li></ul><ul><li>External Links </li></ul><ul><li>Special administrative regions </li></ul><ul><li>Tourism </li></ul><ul><li>Zhujiang New City </li></ul><ul><li>Asia Games 2010 </li></ul><ul><li>Yangtze River Delta </li></ul><ul><li>Financial Capital </li></ul><ul><li>Pudong “Development Zone” </li></ul><ul><li>Port development </li></ul><ul><li>Expo 2010 </li></ul>
    18. 19. Shift in Policy Emphasis onto Tier II cities <ul><li>8 th 5YP(1991-1995) </li></ul><ul><li>Consolidate Five SEZ </li></ul><ul><li>Open Pudong New District </li></ul><ul><li>9 th 5YP(1996-2000) </li></ul><ul><li>Concept of “Go West” and central China development Policy </li></ul><ul><li>10 th 5YP(2001-2005) </li></ul><ul><li>Official launch of “Go West” policy </li></ul><ul><li>Policy to “Revitalize Old Industrial Base” </li></ul><ul><li>11 th 5YP(2006-2010) </li></ul><ul><li>Re-emphasize on Chengdu-Chongqing axes </li></ul><ul><li>Position Tianjin as Economic Centre in North China </li></ul>
    19. 20. Dongguan Qingdao Shenyang Xiamen Suzhou Nanjing Shenzhen Tianjin Dalian Chengdu Xi’an Guangzhou Wuhan Hangzhou Chongqing Shanghai Beijing Hong Kong Macau Tier I and II Cities: GDP Growth Tier I Tier II % 2005 Strongest Economic Growth in Tier II cities II III
    20. 21. Foreign Investors Move Across China The Beginning: Hong Kong Wave One: Beijing, Shanghai Guangzhou Wave Two: Chengdu, Chongqing, Dalian, Hangzhou, Harbin, Jinan, Macau, Shenyang, Suzhou, Tianjin, Wuhan, Wuxi, Xian, Xiamen
    21. 22. Real Estate Capital Flows move to Tier II cities
    22. 23. Signals of Change: Retailer Expansion
    23. 24. Wal-Mart’s Presence - Over 60 Stores across China Dalian Qingdao Beijing Tianjin Shanghai Shenyang Xiamen Shenzhen Shantou Dongguan Chongqing Kunming Fuzhou Changsha Wuhan Nanchang Changchun Harbin Jinan Nanjing Nanning Guiyang Taiyuan Source: Wal Mart Website
    24. 25. Macquarie Shopping Mall Portfolio Jinan Harbin Dalian Tianjin Shenyang Nanjing Nanning Changsha Wuhan Beijing Shanghai Guangzhou
    25. 26. Signals of Change: Bank Expansion
    26. 27. Signals of Change: High Tech Expansion
    27. 28. The Investors’ Geography Taiwan Japan Korea MNCs Xiamen Dalian Qingdao Yangtze River Delta Xiamen II III
    28. 29. China 30: City Evolution Curve
    29. 30. China 30: City Evolution Curve Ningbo Wuxi Fuzhou Jinan Harbin Changchun Zhengzhou Changsha Maturing Shanghai Beijing Zhuhai Wenzhou Lanzhou Urumqi Kunming Hefei Nanchang Nanning Changzhou Growth Early Adopters Watch List Dormant Guangzhou Shenzhen Chengdu Hangzhou Tianjin Chongqing Suzhou Wuhan Nanjing Dalian Shenyang Qingdao Xi’an Xiamen Dongguan Short Term Winners Medium Term Winners Longer Term Winners
    30. 31. Property Opportunities Dormant Early Adopters Growth Property Opportunities Maturing Active Players in the Market <ul><li>Low-end Retails </li></ul><ul><li>Mass Residential </li></ul><ul><li>Specialist Opportunities </li></ul><ul><li>e.g. Tourism and Hotel sector </li></ul><ul><li>Office </li></ul><ul><li>Luxury Retail </li></ul><ul><li>MICE </li></ul><ul><li>Logistics </li></ul><ul><li>Hi-end Residential </li></ul>Various Investment opportunities for institutional investors
    31. 32. II III China’s Emerging Tier II Cities <ul><li>Tianjin </li></ul><ul><li>10 million inhabitants </li></ul><ul><li>Manufacturing/Freight Hub </li></ul><ul><li>Improving linkages with Beijing </li></ul><ul><li>Suzhou </li></ul><ul><li>IT Manufacturing Hub </li></ul><ul><li>High FDI </li></ul><ul><li>Proximity to Shanghai </li></ul><ul><li>Dalian </li></ul><ul><li>IT Hub </li></ul><ul><li>Emerging BPO Cluster </li></ul><ul><li>Japanese Investment </li></ul><ul><li>Hangzhou </li></ul><ul><li>IT Hub </li></ul><ul><li>Labour Skills </li></ul><ul><li>Proximity to Shanghai </li></ul><ul><li>Chengdu </li></ul><ul><li>Commercial Hub of SW China </li></ul><ul><li>Manufacturing Centre </li></ul><ul><li>Target for International Developers </li></ul>Dalian Tianjin Chengdu Suzhou Hangzhou
    32. 33. Tier II and |III cities: Drivers of Growth? <ul><li>10 Drivers we identified…. </li></ul>Industrial Heritage Cities Ripple Effect Cities Port Cities Gateway Cities R&D Cities Administration Targets Hi-Tech Cities Culture Cities Neighbours Cities Transportation Cities
    33. 34. Industrial Heritage Cities Shenyang & Changchun <ul><li>Old Heavy Industrial Base </li></ul><ul><li>- Changchun: Car Manufacturing </li></ul><ul><li>- Shenyang: Chemicals & Machine Tools </li></ul><ul><li>Rich JV opportunities for foreign investors </li></ul><ul><li>Improving Infrastructure </li></ul>
    34. 35. Hi-Tech Cities Dongguan & Wuhan <ul><li>Dongguan : Significant FDI from Hong Kong and Taiwanese companies for computer components/Export driven economy </li></ul><ul><li>Wuhan : The “Detroit of China” / China’s largest laser equipment production base and the third largest optical fibre producer in the world </li></ul>
    35. 36. R&D Cities Nanjing & Xi’an <ul><li>High Skilled Labour Force </li></ul><ul><li>Nanjing: number of engineers twice as high as in Shanghai </li></ul><ul><li>Xi’an: ranks third in R&D capability after Beijing and Shanghai </li></ul><ul><li>Promising Future in R&D Sector </li></ul><ul><li>- Nanjing has become a favourable location for auto design and development. Ford had big commitment in the city </li></ul><ul><li>- Xi’an aims to become another “Bangalore” by carving out a niche in IT outsoucing </li></ul>
    36. 37. Ripple Effect Cities Suzhou, Hangzhou, Wuxi, Changzhou, Hefei & Jinan <ul><li>Benefiting from Cost-based decentralization from Shanghai </li></ul><ul><li>Moving up value-chain </li></ul><ul><li>- Suzhou developing hi-tech Industry </li></ul><ul><li>- Wuxi focusing on solar-energy industry </li></ul><ul><li>Changzhou expanding to MICE activities </li></ul><ul><li>Hangzhou has active indigenous private sector </li></ul><ul><li>Hefei & Jinan benefiting from second-wave ripple effect over medium term </li></ul>
    37. 38. Neighbours Dalian, Qingdao, Xiamen & Fuzhou <ul><li>Geographic location offers opportunities for cooperating with nearby countries </li></ul><ul><li>Dalian and Japan </li></ul><ul><li>Qingdao and Korea </li></ul><ul><li>Xiamen and Taiwan </li></ul><ul><li>Fuzhou and Taiwan </li></ul>
    38. 39. Administrative Targets Chengdu, Chongqing & Tianjin <ul><li>Chengdu & Chongqing: Target of “Go West” policy </li></ul><ul><li>Preferable choice for those MNCs seeking to access the large domestic consumer markets in west China </li></ul><ul><li>Tianjin: Economic Centre in North China </li></ul><ul><li>Airbus set up its first assembly line outside Europe in Tianjin </li></ul>
    39. 40. Port Cities Ningbo <ul><li>Ningbo Port will double in size by 2010 One of the top 5 ports in China </li></ul><ul><li>Completion of Hangzhou Bay Bridge (2008) links Ningbo directly to Shanghai </li></ul><ul><li>Wealthy local residents </li></ul>
    40. 41. Transportation Hubs Zhengzhou & Nanchang <ul><li>Zhengzhou: Railway Hub of China/on the major north-south axis from Beijing and southern China </li></ul><ul><li>Nanchang: allowing Hong Kong and Macau investors to invest in public transportation industry </li></ul>
    41. 42. Gateway Cities Kunming, Harbin & Nanning <ul><li>Kunming: International highway connecting Chengdu and Bangkok is planned </li></ul><ul><li>Nanning: Benefiting from a booming Vietnamese economy </li></ul><ul><li>Harbin: links with Russia, major trading hub in north-east China. </li></ul>
    42. 43. Culture Cities Changsha <ul><li>Creative hub for media and entertainment </li></ul><ul><li>Super Girl Show impact </li></ul><ul><li>Entertainment industry growing rapidly, accounting for 10% of GDP </li></ul><ul><li>The raised city image has attracted lots of well-known developers/investors. </li></ul>
    43. 44. <ul><li>China Context </li></ul><ul><ul><li>Economy </li></ul></ul><ul><ul><li>Investment </li></ul></ul><ul><li>China 30 </li></ul><ul><li>China Logistics </li></ul><ul><li>China Retail </li></ul><ul><li>City Cobwebs </li></ul>China: Emerging City Winners
    44. 45. China Logistics <ul><li>20 Logistics Hotspots appearing on radar screen of logistics operators and developers </li></ul><ul><li>80% of activity in five prime hubs – Shanghai, Shenzhen, Guangzhou, Beijing and Tianjin </li></ul><ul><li>Secondary Logistics Hubs – Suzhou, Ningbo, Qingdao, Dalian and Xiamen </li></ul>
    45. 46. China’s 20 Logistics Hotspots
    46. 47. Source: Jones Lang LaSalle Research China’s 20 Logistics Hotspots
    47. 48. Bohai Bay 21% Yangtze River Delta 43% Pearl River Delta 21% Other 15% Survey of 138 Logistics Operators Source: China Supply Chain Council, Jones Lang LaSalle, 2006 China Warehousing Facilities: Current Activity
    48. 49. China Warehousing Uses Survey of 138 Logistics Operators Source: China Supply Chain Council, Jones Lang LaSalle, 2006 Storage 25% Trans-Shipment 20% Industry Operations 9% Value-Added Services 20% Reverse Logistics 7% Consolidation 18% Current Warehousing Uses
    49. 50. Survey of 138 Logistics Operators Source: China Supply Chain Council, Jones Lang LaSalle, 2006 Value-Added Logistics Consolidation Trans-Shipment Industry Operations Reverse Logistics Storage Score China Warehousing Uses – Growth Prospects
    50. 51. Source: Ministry of Communications of PRC, November 2006 China’s Future Expressway Network
    51. 52. Source: Ministry of Communications of PRC, November 2006 China’s Existing Rail Network
    52. 53. Mainland China’s Major Ports Network
    53. 54. ‘ 000s tons <ul><li>Combines Shanghai’s Pudong and Hongqiao airports </li></ul><ul><li>Source: Statistics Bureau of each City </li></ul>China’s Top Freight Airports, 2005
    54. 55. Beijing 13% Tianjin 5% Shanghai 32% Suzhou 7% Guangzhou 12% Shenzhen 9% Chengdu 6% Xiamen 3% Greater Bohai Bay 21% Yangtze River Delta 43% Pearl River Delta 21% Other 15% Survey of 138 Logistics Operators Source: China Supply Chain Council, Jones Lang LaSalle, 2006 Region City Warehousing Facilities: Current Presence
    55. 56. Greater Bohai Bay 23% Yangtze River Delta 27% Pearl River Delta 35% Other 15% Beijing 13% Tianjin 8% Shanghai 23% Suzhou 2% Guangzhou 19% Shenzhen 15% Chengdu 12% Region City Survey of 138 Logistics Operators Source: China Supply Chain Council, Jones Lang LaSalle, 2006 China Warehousing Facilities: Plans for Next 2 Years
    56. 57. Source: Jones Lang LaSalle, 2006 US$/sq m/year Warehousing Rental Ranges
    57. 58. <ul><li>China Context </li></ul><ul><ul><li>Economy </li></ul></ul><ul><ul><li>Investment </li></ul></ul><ul><li>China 30 </li></ul><ul><li>China Logistics </li></ul><ul><li>China Retail </li></ul><ul><li>City Cobwebs </li></ul>China: Emerging City Winners
    58. 59. China: Retail Futures China’s Consumer Groups The Lost Generation The Emerging Middle Classes The Girls of the Economic Miracle The Little Emperors The New Elite and Super Rich The Vibrant Youth
    59. 60. World Largest Shopping Malls China South China Mall, Dongguan Golden Resources Mall, Beijing Panda Mall, Chengdu Grandview Mall, Guangzhou Oriental Plaza, Foshan Mall of China, Qingdao Triple 5 Mall, Wenzhou North America West Edmonton Mall, Alberta South Coast Plaza, Orange County Sawgrass Mills, Ft Lauderdale Mall of America, Minnesota Del Amo Fashion Center, LA Source: New York Times
    60. 61. <ul><li>China Context </li></ul><ul><ul><li>Economy </li></ul></ul><ul><ul><li>Investment </li></ul></ul><ul><li>China 30 </li></ul><ul><li>China Logistics </li></ul><ul><li>China Retail </li></ul><ul><li>City Cobwebs </li></ul>China: Emerging City Winners
    61. 62. Beijing City Cobweb: Beijing
    62. 63. Shanghai City Cobweb: Shanghai
    63. 64. Guangzhou City Cobweb: Guangzhou
    64. 65. Shenzhen City Cobweb: Shenzhen
    65. 66. Chongqing City Cobweb: Chongqing
    66. 67. Chengdu City Cobweb: Chengdu
    67. 68. Tianjin City Cobweb: Tianjin
    68. 69. Wuhan City Cobweb: Wuhan
    69. 70. Xi'an City Cobweb: Xi’an
    70. 71. Hangzhou City Cobweb: Hangzhou
    71. 72. Suzhou City Cobweb: Suzhou
    72. 73. Nanjing City Cobweb: Nanjing
    73. 74. Dalian City Cobweb: Dalian
    74. 75. Xiamen City Cobweb: Xiamen