Chinese cities such as Chengdu (with 5 million residents) and Chongqing (9 million), lesser known outside the region, are growing rapidly, providing attractive investment and development opportunities, according to ULI’s first China Cities Survey report.
The survey, conducted this past March to gauge investment and de–velopment prospects for 16 of China’s larger cities (those with a population of at least 2.4 million), found the majority to be “of strong interest” to investors active in the region. The top-ranked city for investment possibilities was Chengdu, with Shanghai, Chong-qing, and Beijing following close behind. However, all the remaining cities in the survey—in descending order in terms of investment prospects, Nanjing, Wuhan, Dalian, Qingdao, Tianjin, Wuxi, Shenzhen, Suzhou, Hangzhou, Guangzhou, Changsha, and Shenyang—received favorable ratings.
The explosive growth of the cities in the survey—eight of the 16 have a population exceeding 5 million—is “resulting in a building boom that is difficult for many outside of China to comprehend,” the report states. The survey was intended as a pilot study to focus initially on the cities commonly perceived to be among the strongest economically.
Overall, the retail and industrial/distribution sectors in the 16 cities received the most buy recommendations rather than hold or sell. These sectors were followed by the apartment, hotel, and office sectors.
Comparisons to rankings of U.S. and European cities in the Emerging Trends in Real Estate® reports published each year by ULI and Price-waterhouseCoopers are instructive. Only nine of the 51 U.S. cities and seven of the 27 European cities included in the 2011 Emerging Trends publications achieved an investment rating as high as the lowest-ranked Chinese city, emphasizing the extraordinary appeal of these markets for investment and development.
The survey included 98 land use professionals, nearly half of whom are based in China, with just over one-third located in Hong Kong. “It is an accepted fact that Western global real estate firms are behind their direct competitors, both international [Asia Pacific] and domestic, by almost one full wave,” one re–spondent observed.
In terms of development potential, the survey found great enthusiasm among participants, reflecting the high demand for new construction to accommodate the cities’ surging growth. As a group, the cities all scored higher for development than investment prospects. Chengdu was rated highest for development, followed by Chongqing and Wuhan.
The full report is available as a pdf at
ULI Capital Markets Center