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Beijing industrial property powering ahead

By Di Chan (China Daily)
Updated: 2007-07-06 10:23

Beijing is a growing attraction for foreign capital in its industrial property market, in part due to favorable government policies, international real estate advisory firm DTZ said yesterday.

"This contributes to Beijing's economy through the government's favorable policy for industrial property compared to its restraining measures in the residential sector," said Peter Zhang, a senior manager at DTZ Beijing's industrial division.

From January to May 2007, Beijing's economy continued to roar ahead, with fixed-assets investment in the entire city topping 110.2 billion yuan, up 15.3 percentyear-on-year. The total value of industrial exports hit 69.7 billion yuan, an annual increase of 36.7 percent .

The capital's industrial sites are expecting further development due to Ministry of Land and Resources' regulations enacted at the end of last year.

The regulations now require that the sale and transfer of industrial land must be completed through auction or bidding and sets minimum prices for all grades of industrial land.

"It will cause industrial land prices to rise and have an upward influence on rentals and prices of industrial premises," said Zhang. "The extent of the increase, however, remains uncertain."

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Large corporations are more apt to purchase land and build factories in industrial zones and logistics parks, while the demand for standard industrial facilities, such as factories and warehouses, mostly comes from smaller companies, according to DTZ research.

Foreign investors have recently accelerated expansion into industrial property, given the nation's strength as a manufacturing hub and its booming logistics industry.

Australia's largest listed industrial property firm Goodman - formerly known as Macquarie Goodman - the world's second-largest industrial property developer, is planning to pour $2 to $3 billion into China over the next three to five years, mainly in Beijing, Shanghai and Guangzhou, according to David van Aanholt,CEOof Goodman Asia-Pacific.

Although there has been a steady supply of standard industrial sites, high quality properties remain scarce, Zhang said.

About 85,000 square meters of standard industrial facilities were put on Beijing's market in the first half of 2007, including 60,000 square meters of standard factory space and 25,000 square meters of standard warehouse property.

The combined total of standard industrial sites in Beijing reached 1.04 million square meters by the end of June, with about 384,000 square meters of it vacant.