Chengdu Office Market Continues to Witness Upward Trend in by hermanrose24

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									P R E S S                 R E L E A S E                           Units 1203-1205, 12th Floor, Tower A,
                                                                                Beijing Fortune Plaza,
                                                                    No. 7 Dong San Huan Zhong Road,
                                                                                     Chaoyang District,
                                                                                Beijing 100020, P.R.C.


                                                                          北京市朝阳区东三环中路 7 号
                                                                            北京财富中心写字楼 A 座
                                                                            第 12 层 1203-1205 单元
                                                                                邮政编码: 1000205




FOR IMMEDIATE RELEASE: 31st July, 2007
 For further information:
 Karen Chen                                       Lillian Liu
 Director                                         Assistant
 Corporate Communications                         Corporate Communications
 CB Richard Ellis Greater China                   CB Richard Ellis Greater China
 Office: (86-10) 5820 9111                        Office: (86-10) 5820 9173
 karen.chen@cbre.com.cn                           lillian.liu@cbre.com.cn



 Chengdu Office Market Continues to Witness Upward Trend in Rentals and
    Price, Driven Largely by Positive Expansionary Requirement and MNC
                                         Demand


July 31, 2007 Beijing – Chengdu’s economy has witnessed consistent strong economic
growth over the past few years, averaging a GDP growth rate of 15.5% per annum
between 2000 and 2006. This is bolstered by sustained development of local commerce,
financial and industrial sectors; strong local technological and R&D capabilities; and the
buoyancy of the stock market in China. As a result of this economic success the Chengdu
property market saw an upsurge of transaction activity, with yields strengthened across all
sectors with rents growing during the first half of 2007. In particular, the office leasing
and sales market demonstrated strong performance.


In the past three years, the supply of Grade A office space in Chengdu has increased
dramatically, rising 45% from around 132,000 sq.m. in 2003 to 324,000 sq.m. at present.
New supply of prime office space was boosted by about 40,000 sq.m. as at now, largely
due to the opening of the Shangri-La Centre (see Appendix 1.). Grade A office space is
predominantly taken up by multinational companies (MNCs); banks, financial institutions,
law firms, as well as advertising, sales and marketing companies to meet their expansionary
requirement.


Chengdu’s average prime rental reached RMB 89.3 per sq.m. per month in the second
quarter of 2007, up by 6.8% from the first quarter. The opening of the Shangri-La Centre
raised Grade A office rentals this quarter to RMB 103.3 per sq.m. per month, representing a
q-o-q increase of 8.6%.


Prime office premises presently offered for sale in Chengdu command average sales price of
RMB 9,556 per sq.m. The average sales price of Grade A office properties was RMB 10,900
per sq.m. Both prime and Grade A office sales prices registered q-o-q increases of 3.1%
and 3.6%, respectively.


“A substantial increase in office demand has been registered over the past few years, and we
foresee this trend continuing in 2008. New entrants to the Chengdu office market,
particularly the MNCs and financial institutions, have also been a significant force. With a
new supply of properties such as Shangri-La Centre, we anticipate an increasing level of
transaction activity in Chengdu,” said Siang Huei Loh, Managing Director of CBRE Chengdu.


Looking ahead, CB Richard Ellis expects strong growth for office demand, particularly in the
financial, professional, and business service sectors, as companies look to capitalise on the
exponential growth within Chengdu. CB Richard Ellis expects that over 140,000 sq.m. of
Grade A office space will be released into the market over the next 12 months. This major
quantum of new supply in the pipeline will help to ease pent-up demand. While it is believed
that quality office accommodation will remain highly sought after, that rental values of older
office properties are likely to come under some pressure to soften amid the rising level of
market competition.


APPENDIX 1.



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Shangri-La Centre
Of particular note this year, the Shangri-La Centre Office Tower is the only prime office
property in Chengdu meeting international Grade A standards. It is the most significant
mixed use development, rivaling the quality of buildings in Hong Kong. Located in
Hejiangting, one of Chengdu’s famous cultural and historical areas, the Shangri-La
Centre will be within the new Government planned commercial district.


The Shangri-La Centre development also features the luxury 600 room hotel and serviced
apartments managed by the world-renowned Shangri-La Group. “Being associated with
the world recognized five star Shangri-La Hotel, we are proud to be presenting our first
office tower in Chengdu to serve occupiers of the office tower in the same way we serve
with our hotel guests”, says Timothy Wu Director of Realty Development for the Shangri-
La Hotels and resorts Group. “We are proud to be able to offer the highest levels of
building quality and premium management which will be unrivalled in Chengdu” Mr Wu
continued.


In addition to overall quality, the office towers advanced design and specifications benefit
tenants with by maximizing productivity, enhancing convenience and providing a
healthier environment.    “With its striking design, the Shangri-La Centre is already
attracting such prestigious names across various industries such as Servcorp, OCBC,
HSBC and Swire Properties” said Nigel Smith, Executive Director of Office Services, Greater
China, the appointed marketing and leasing agents.


“Although only recently completed, based on current the current level of interest, we
expect to reach 40% commitment within a short period of time” continued Nigel Smith.
The office tower itself totals approximately 44,700 sm and stands 31 stories high. Each
office floor totals approximately 1,500 sm and benefits from a column free design
rectangular shape. Landlord provisions include a 150 mm raised floor, VAV air-
conditioning, metal ceiling and light boxes. With full height windows and over 11 meter
bay depths, natural light is designed to maximize tenant’s comfort and energy efficiency.



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“All in all this is a spectacular development and one which CBRE is proud to be
associated with” said Mr Smith.


                                                    -    End –



About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), an S&P 500 company headquartered in Los Angeles, is the
world’s largest real estate services firm (in terms of 2006 revenue). With over 24,000* employees, the
Company serves real estate owners, investors and occupiers through more than 300 offices worldwide
(excluding affiliate and partner offices). CB Richard Ellis offers strategic advice and execution for property
sales and leasing; corporate services; property, facilities and project management; mortgage banking;
appraisal and valuation; development services; investment management; and research and consulting. In
2007, BusinessWeek named CB Richard Ellis one of the 50 “best in class” companies across all
industries.   Please visit our Web site at www.cbre.com

* This excludes 5000 employees from affiliate offices




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