Property may become focus for investors

(China Daily)

10:24, October 08, 2011

Pedestrians make their way through the Sanlitun Village retail complex in Beijing, which has attracted investment from Swire Pacific Ltd and JP Morgan Chase & Co. Cushman & Wakefield LLP says China's commercial property market is attractive to international investors. (China Daily / Agencies)
SHANGHAI - While the United States and certain European countries are experiencing difficult times, China's commercial property sector remains the apple of the eyes of international real estate service providers.

"China is critical to our strategy, and we are very focused on developing our businesses here. For us, the biggest investment in China is obviously to grow the business in terms of talent. We provide advisory services, so we hire entrepreneurial, creative people with experience in real estate," said Carlo Sant'Albano, chairman of the board with the global property service provider Cushman & Wakefield LLP, a privately held company, which is headquartered in New York.

According to Sant'Albano, the company's staff numbers in China have grown 22 percent annually over recent years, and the rate will probably reach 30 percent by the end of the year.

Despite focusing on locations such as Shanghai, Beijing and Guangzhou, Cushman & Wakefield will continue to explore value in the nation's second- and third-tier cities, he said.

Currently, Asia contributes approximately 8 or 9 percent to the company's global revenue, and China accounts for about 30 percent of the company's revenue in Asia, according to Sanjay Verma, CEO for the Asia-Pacific region.

Sant'Albano said China offers tremendous opportunities for foreign companies and investors, and also for Chinese companies and investors looking to diversify and grow overseas.

"Every company is looking into China in terms of future growth, because of the potential domestic consumption. There is no question that companies are looking to grow here. As domestic consumption grows, and the middle class grows, there is going to be a significant demand for real estate," said Sant'Albano.
Lu Qilin, research director at Shanghai Deovolente Realty Co, held a similar opinion. "Commercial properties will likely become the next investment focus," Lu said. "Compared with the stock and gold markets, property investment has higher returns, a brighter future thanks to China's urbanization trend, and fewer purchasing restrictions," he added.

Regarding the ongoing economic slowdown in the United States and Europe, Andy Zhang, managing director of Cushman & Wakefield China, said: "Although the market is challenging, we are now seeing more opportunities." Every year there is a huge population coming from the countryside into cities, and at a scale never previously experienced by any country.

Verma said Shanghai could become a financial center similar to New York, Hong Kong, Singapore and Tokyo, because institutions will benefit from the capital and economic activity moving into the city.

Even if China doesn't grow at the predicted 8 to 10 percent, but at a figure 1 or 2 percent lower, there will still be tremendous growth. Furthermore, its economy will be increasingly focused on encouraging domestic consumption. "Therefore, there is tremendous potential for growth, driven by the needs of domestic consumption," said Sant'Albano.

In Verma's opinion, the global financial meltdown in 2008 and the ongoing economic downturn have helped to rid China of its obsession with high growth rates.

"It's great to see Premier Wen Jiabao say that we need to slow down. That's very positive, because a few years of moderate growth would provide a long-term benefit to this country," said Verma.




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