Date: 08-DEC-08 to 11-DEC-08
Venue: Pudong Shanghai

Shanghai’s macro economy continued the strong momentum during the first three quarters in 2007. The secondary industries grew rapidly, by 11.9% YoY. Industrial investment maintained brisk growth and port trade expanded notably. The above strong growth momentum underpinned a favourable climate for Shanghai industrial property market.

Fixed asset investment in industry rose 11.2% YoY during January to September. Total profits of industrial enterprises surged 32.5%, reflecting the robust trend and potential for faster future growth in the industrial market. At the same time, the demand on industrial land and warehouse facilities has been fuelled by the booming port trade, which reached a growth of 20.9%, and increasing port throughput, which expanded by 4.4% to 419.57 million tons.
 

Event Profile

Industrial Properties is the growing demand for warehouse, manufacturing and business space in China has led to an increasing importance for quality industrial properties. This event will provide a meeting place for industrial property developers, the land owners and tenants to meet and discuss the latest developments in industrial properties and also benchmark their properties against the competition. Types of properties covered: Industrial Parks, Business Parks & Logistics Parks.

Visitor's Profile

Industrial Property Developers, Local Government, Contractors/Engineering, Manufacturing Companies, Pharmaceutical Companies, Cargo / Warehousing Companies (3PLs), Telecommunications Companies, FMCG & MNCs, IT Companies, Chemical Industry, Hypermarts, Large-Scale Retailers & Automotive.

Exhibitor's Profile

Profile for exhibitor includes industrial properties, Landlord, Developer & Occupier, devlopment & investment agents, Logistics & Industry trends and property, Manufacturing: The rise of a sophisticated & savvy, Business Parks: The way of the future for corporate and R & D operations in China.

Economic Review

The foreign direct investment (FDI) in Shanghai went up 10.9% YoY from January to September. Although FDI in the secondary industries declined by 3% YoY, it still reached US$2.177 billion and the decline has narrowed by 6.5 percentage points as compared with H1. Moreover, FDI in the secondary industries still accounted for 34.27% of total FDI in Shanghai. This suggests that secondary industries are still the destination of foreign investment
On the policy front, the regulation on land acquisition released by the Ministry of Land Resources recently stipulated that developers are required to pay off all land transaction fee before they can get construction approval from government. This suggests that land use right certificate issued by instalments is now prohibited. The measure would exert pressure on developers’ funding, particularly on large-scale projects, and so increase their costs in land acquisition.

On the other hand, the Central Bank lifted interest rates successively for five times over the past three quarters, of which the one-year loan benchmark rate increased by a total of 1.17 percentage points, from 6.12% to 7.29%. In addition, the Central Bank lifted the reserve ratio from 9% in the beginning of 2007 to 13.5% in November, the latest was the ninth adjustment in the year. These tightening measures put some stress on the developers’ financial position.

Supply Demand, Vacancy

There are 339,000 sq m of industrial facilities newly released from June to October, a slight decline of new supply as compared with that from January to May. Among which, Qingpu, Baoshan and Xinzhuang industrial parks witnessed more abundant new supply, accounting for 59%, 15% and 15% of the total respectively. The major industrial facilities completed in our report period included: 80,000 sq m facilities in Anting Auto City, 180,000 sq m factories in Lingang Industrial Zone, 23,000 sq m warehouses in Baoshan Industrial Zone, 13,800 sq m factory of Shanghai Usui Engine Parts in Xinzhuang Industrial Park, as well as Siemens’ 27,000 sq m factory in Qingpu Industrial Park.

Since the Shanghai Government positions logistics as a priority industry in its future planning, coupled with Shanghai’s improving soft and hard facilities as a regional trade and shipping hub, many industrial property developers strengthen their strategic investment in the logistical market. For example, Goodman, a global industrial real estate giant, now has two properties in Shanghai - a distribution center in Fengxian and a logistics center built for DHL-Exel in Kangqiao. Three more deals, also logistics and distribution centers in suburban areas of the city, will be finalized in the next few months. The investment value of the five projects totaled US$200 million. ProLogis plans to add between 1 million and 1.5 million sq m of service space a year on average in the next few years to expand its China portfolio. Meanwhile, its annual investment in the China market will reach US$300 million to US$500 million. In Shanghai, ProLogis now operates three logistics parks in Putuo, Minhang and Nanhui. It expects to strengthen further its business in Shanghai in 2008.

The bullish economic outlook together with the growth in China’s consumption market have been driving foreign manufacturers to set up new factories and logistical centers in Shanghai, which underpin the strong demand in the industrial property market. The major transactions include Nivea’s purchase of a 50,000 sq m land and Invista’s purchase of a 20,000 sq m land lot in Qingpu Industrial Park; as well as Culp’s renting of a 10,000 sq m factory in Qingpu Export Processing Zone. The logistics property market also showed a flourishing trend. The electronic giant, Best Buy rented a 6,200 sq m warehouse in Minhang Logistics Park.

According to Colliers’ survey on vacancy rate, the average vacancy rate of leading industrial parks declined by 0.75 percentage point compared to May, to 2.37%. Zhangjiang and Songjiang witnessed lowest vacancy rates at 0.3% and 0.46% respectively. Since there is less room for favourable policies to attract tenants, the industrial parks will compete more on amenities, transportation facilities and operational efficiency.

Business Parks Market Update

As the average rental of Grade A office facilities in CBD continues to surge, a lot of cost-sensitive tenants turn to the alternatives in outlying areas. Traditional industrial hubs have been committing to develop into office space to meet the relocating demand. According to the market survey, the average rental in business parks rose by 17.5% YoY in October to RMB 3.76 per sq m per day. The Knowledge Innovation Community continued to hold the top 1 position in rental, at RMB 4.48 per sq m per day, followed by International Business Park and Caohejing, both at RMB 4.32 per sq m per day.

Looking ahead, it is undoubted that China economy will maintain a steady uptrend, which is evidenced by the key leading industrial indicator. Meanwhile, Shanghai is going to hold the edge in absorbing foreign direct investment. Moreover, with the development of logistics, Shanghai will become a more influential regional logistics and business hub. Therefore the demand for standard factories will be enhanced, while outlook for logistical facilities will be even brighter. We project the vacancy rate of warehouses to decline further; and both capital value and rental will go up about 7% in tandem due to limited new supply in the coming 12 months.

The land price is expected to continue to rise, by over 10% in the next 12 months due to fiercer competition. On business parks front, the demand from relocations and new establishments will remain robust. Yet new supply is expected to be also ample. As a result, rental growth will slowdown somewhat.

Organizer

IBC Conference & Event Management Services ( Shanghai ) Co., Limited
Unit 3406-07, CITIC Square, 1168 Nanjing (West) Road,
Shanghai, India.
Tel: +(86)-(21)-51165912
Fax: +(86)-(21)-51165913