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                      PROPERTY NEWS AND VIEWS                                                                                                  Febrruarry 2007
                                                                                                                 Feb ua y 2007

Office – Shanghai office market providing more alternatives
Shanghai’s office market continues to demonstrate its versatility with the emergence of a number of
alternative developments primarily aimed at the creative industries. Phase 1 of Red Town, located on West
Huaihai Road, reached 85% occupancy in February. Phase 2 is set for a staged handover between May and
September of 2007 providing up to 20,000 sqm of converted warehouse style accommodation across 4
standalone buildings. In southern Luwan district, X2 saw an undisclosed tenant take over 900 sqm of office         Demand
space, leaving only 2,000 sqm of vacant space in the development. At the heart of the French Concession,
the boutique Ferguson Lane development on Wukang Road reached 92% occupancy by handover in
February of this year. The development has realised rentals at a rate above RMB 7.0 per sqm per day,
putting it on par with some of Shanghai’s grade A office space.

      Tim O’Connor           T: 8621 2401 1200 Ext. 1398 F: 8621 5403 7435   E:

Residential Leasing – Market perked up after Chinese New Year holiday                                              Supply

After the cheerful lunar new-year holidays ended, the remainder of February saw the Shanghai residential
leasing market begin to perk up. The areas that are most popular for expatriates have continued to remain          Rent
the same. Jinqiao, Hongqiao, eastern Minhang and western Changning continue to be well-liked places for
expatriates to live primarily due to their proximity to the popular international schools.         The central
downtown districts such as Xin Tian Di and Lujiazui continue to increase in popularity. However, the stock of
luxury apartments and villas have not increased much and there was no significant news from any of
Shanghai’s developers this month. A low vacancy rate combined with an increasing demand as the year                Vacancy
goes on could mean more difficulties in lease negotiations in the coming months especially for villas.

      Jane Alexander         T: 8621 2401 1200 Ext. 1338 F: 8621 5403 7491E:

Residential Sales – Lower level of transactional volume seen in Chinese New Year Holiday

Residential transactional volume witnessed an obvious downswing. The last day of February only registered
383 transacted units, far below the average volume of 500 units per day for 2006. While the price held the
line, total transacted area dipped by 44% from January’s 1,771,000 sqm to 991,000 sqm of February,
due to the downturn seen in Chinese New Year Holiday. But compared to 840,000sqm registered at the                 Capital
corresponding period in 2006, the transactional area in this February seems relatively higher. The Holidays        Values
also exerted a declining impact upon the supply end. February witnessed a pause of new supply in the
downtown, as some developers geared down their project launching. The shortage of supply, to a certain             Demand
extent, depressed to transaction activities. Whereas, with the release of new projects after holiday period,
transactional volume is expected to pick up.

    David Chen               T: 8621 2401 1200 Ext. 1282 F: 8621 5403 7491   E:

                                                                                                                              February 2007
Retail – Month of the flying pig

With Chinese New Year falling in the month of February many retailers made a rush to open new stores.                             Supply
Brilliance Group opened their 126,000sqm new Wujiaochang project, New Era Mall, to the sound of
firecrackers. Opposite to the Wanda shopping mall, the project is home to a number of chain retail outlets
such as Starbucks, Bestseller and Sephora and should create the critical mass to attract customers to the                          Rent
new retail hub. Costa Coffee also continued on there expansion plan opening a 440sqm flagship store at
Grand Gateway in Xujiahui.
  Nancy Zhu                      T: 8621 2401 1200 Ext. 1267      F: 8621 5403 7430     E:

 Industrial – Yangtze River Delta, being the significant economic development zone in China

 According to the statistics, GDP for 16 cities in Yangtze River Delta achieved RMB3.95 trillion in total last
 year, increasing RMB 556.3 billion compared with 2005. As one of the major economic drives for the
 nation, the region contributes as much as 18.9% of the total GDP, by achieving an average GDP growth of                           Supply
 14.7%. As the first city realizing RMB 1 trillion plus GDP, Shanghai continues to lead in total economic
 volume in 2006. 8 cities along Yangtze River in Jingsu Province reach total GDP in excess of RMB1.7 trillion
 while GDP for 7 cities in Zhejiang Province has also broken RMB1.1 trillion. According to their economic                          Rent
 volume, the major cities in the region can be classified into four ranks. Shanghai alone is considered the
 first rank, while 5 cities including Suzhou, Hangzhou, Wuxi, Ningbo and Nanjing rank 2nd with GDP
 surpassed RMB200 billion. Further down in the hierarchy, the third rank is composed of 8 cities including                         Vacancy
 Nantong, Shaoxing, Changzhou, Taizhou, Jiaxing, Yangzhou, Zhenjiang and Taizhou with their GDP
 between RMB100 billion to RMB200 billion. Finally, Huzhou and Zhoushan are the lowest on the ladder
 with the GDP below RMB100 billion.                                                                                                Demand

    Andrew Hatherley             T: 8621 2401 1200 Ext. 1257 F: 8621 5047 1171 E:

Investment – Market seeing great prospect

Investment momentum seemed to have slowed down in February as a result of Chinese New Year Holiday.
However, it has been established that more foreign investors are coming to China market as the market
proved bullish despite of tightening measures in 2006. The strong market fundamentals and the currency
appreciation definitely boost investors' confidence for the short and mid term. It is expected to see more
transactions later this year.

         Frank Cao               T: 8621 2401 1200 Ext. 1320 F: 8621 5403 7491 E:

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 services firm (in terms of 2005 revenue). The Company serves real estate owners, investors and occupiers through more than 350 offices (including
 affiliate and partner offices) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property,
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 website at

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