Investment Market Update
Mainland China Q1 2010
Land transactions remain buoyant
14 April 2010 Driven by record-breaking land deals, the total value of major
transactions (each with a unit value of more than US$10m)
increased by 9.2% in Q1 2010 compared to the previous quarter
Author to reach US$39.4bn. Building transactions accounted for only
4.4% of the total value (Figure 1).
Keith Chan
Research Manager China’s urbanisation process is stimulating strong demand for
+852 2507 0181 residential housing; property investors and developers are
keith.kh.chan@dtz.com
investing huge amounts of money in land and property in order to
satisfy this demand.
Contacts Unlike in the previous quarter, demand for office properties
David Ji softened. The total transacted value saw a 63% quarter-on-
Head of Research, North Asia quarter (q-o-q) drop.
+852 2507 0779
david.yx.ji@dtz.com In Q1 2010, 60% of total investment value was transacted in
China’s first-tier cities, particularly in Beijing and Shanghai.
David Green-Morgan
Head of Research, Asia Pacific Second-tier cities took up the remainder with Dalian, Wuhan and
+61 (0) 2 8243 9913 Tianjin taking the lead in terms of transacted value.
david.green-morgan@dtz.com
Hans Vrensen
Global Head of Research
+44 (0)20 3296 2159 Figure 1
hans.vrensen@dtz.com Total real estate purchasing activity by transaction type
US$m
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2008 2008 2008 2008 2009 2009 2009 2009* 2010**
Land Building
Note: *Revised figure; ** Preliminary figure
Source: DTZ Research
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Investment Market Update
China’s property investment market continues to Unlike in Q4 2009, we saw demand for office
boom amidst bullish market sentiment. Despite the properties soften in Q1 2010. There was a 63% q-
number of deals falling from 367 in Q4 2009 to 301 o-q drop in the total transacted value. The most
in Q1 2010, the total value of major transactions notable transaction was the sale of Guangzhou Kai
(each with a unit value of more than US$10m) Sa Building for US$412.5m (Table 1).
surged, increasing by 9.2% quarter-on-quarter to
reach US$39.4bn at the end of March (Figure 2). Local developers are extremely bullish regarding
land values and have spent significant amounts of
The increase in transaction value was mostly money on acquiring land. As a result, transacted
driven by rocketing land prices across the country. land values reached record levels in Q1 2010. For
Building transactions contributed only 4.4%, or example, a mixed development site in Guangzhou,
US$1.7bn, to the total investment value. where the 16th Asian Games will be held in
November 2010, was sold to a domestic developer
Growing demand for luxury residential units for US$3.7bn (Table 1).
combined with limited supply makes the luxury
residential sector a good prospect going forward. In Q1 2010, about 60%, or US$23.4bn, of total
In Q1 2010, the transacted value of residential transactions occurred in China’s first-tier cities,
buildings jumped by 23% compared to the particularly in Beijing and Shanghai, with second-
previous quarter. A major deal included the sale of tier cities taking up the remainder (Figure 3). In
Shanghai Garden Plaza in Shanghai for almost terms of transacted value, Dalian, Wuhan and
US$328m (Table 1). Tianjin are leaders amongst the second-tier cities.
Table 1
Significant deals
Address/ project name City Sector Total GFA (sq m) Price (US$m)
Guangzhou Kai Sa Building Guangzhou Office 117,575 412.52
Shanghai Garden Plaza Shanghai Residential 97,227 327.96
Xinmin Taigu City Phase 1 Shanghai Retail 64,672 197.66
Mixed
Guangzhou Asian Game City (Site) Guangzhou 4,380,000 3,733.53
development
Source: DTZ Research
Figure 2 Figure 3
Total real estate purchasing activity by sector Total real estate purchasing activity by location
US$m
US$m
45,000
45,000
40,000
40,000
35,000
35,000
30,000
30,000
25,000
25,000
20,000
20,000
15,000
15,000
10,000
10,000
5,000
0 5,000
Q1 2009 Q2 2009 Q3 2009 Q4 2009* Q1 2010** 0
Offices Retail Industrial Q1 2009 Q2 2009 Q3 2009 Q4 2009* Q1 2010**
Residential Mixed Others/Unknown
1st tier cities 2nd tier cities
Note: *Revised figure; ** Preliminary figure Note: *Revised figure; ** Preliminary figure
Source: DTZ Research Source: DTZ Research
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Investment Market Update
Table 2
Investment market (US$m) (deals over US$10m)
Yr to Q3 Yr to Q4 Yr to Q1
Q1 2009 Q2 2009 Q3 2009 Q4 2009* Q1 2010**
2009 2009 2010
Total investment
4,582 12,783 27,428 36,063 39,391 50,363 80,856 115,666
volume
Total real estate
purchasing
activity by
sector
Offices Land 0 261 203 787 270 498 1,251 1,521
Building 483 88 1,724 1,542 564 2,527 3,837 3,918
Retail Land 76 567 2,332 1,882 2,271 3,813 4,857 7,052
Building 234 59 181 285 198 473 758 722
Industrial Land 353 243 511 720 595 1,266 1,827 2,069
Building 0 0 0 55 22 0 55 77
Residential Land 635 5,050 11,437 16,815 14,123 18,840 33,936 47,425
Building 0 73 116 557 687 189 746 1,433
Mixed Land 2,607 6,295 10,724 11,982 19,156 22,216 31,608 48,157
Building 193 148 146 423 0 487 910 717
Other Land 0 0 54 854 1,257 54 908 2,165
Building 0 0 0 161 249 0 161 410
Total real estate
purchasing activity
(domestic vs. foreign)
Domestic Land 3,671 11,545 23,457 31,797 36,728 42,797 70,470 103,527
Building 745 309 1,906 2,386 1,244 3,192 5,346 5,845
Foreign Land 0 871 1,804 1,243 943 3,889 3,918 4,861
Building 166 59 261 637 475 485 1,122 1,431
*Revised figure
** Preliminary figure
Source: DTZ Research
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© DTZ April 2010
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