Jones Lange LaSalle Property Market Monitor for China is Eye Opening

Tuesday, December 2, 2008 10:28

Historically when reading through the various real estate firm reports, the news was all good.

Geared for landlords and investors, the news of rental rates on the rise, occupancy rates on the rise, and new supply having little impact on pricing (there were just so many entrants coming into the market).

However, things have taken a different tone.. and a different formate.

Now, as seen through the recent  Jones Lange LaSalle Property Market Monitor for China, the graphs are gone, the anlaysis is gone, and in its place a large focus on what the government is doing to shore up the market has taken its place.

For many of my friends in the industry, the tone reflects this.  While enjoying my turkey last week, I was speaking to a member of the industry who was focused on the commercial side and all he needed to say was “rents are off 20-30% over the last 2 months”… I knew the rest.

Being a landlord 2 years ago meant being able to essentially name your price, and eventually (within a week) someone would take it up.  If you were in a particularly hot building, the gap was minimal if none at all.

Now, the tides have shifted, and as I am sure we will see in their more comprehensive JLL quarterly report,  the rent will be off, theoccupancy rates will be off, and the supply coming online will be seen as a threat to any short term stabilization or recovery.

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6 Responses to “Jones Lange LaSalle Property Market Monitor for China is Eye Opening”

  1. SR says:

    December 4th, 2008 at 4:42 pm

    We are seeing consumers still spending… except for auto and real estate. The real estate sector will be in tough shape in the next 6-12 months in China as everyone is taking a wait and see attitude because they believe prices will come down. Good for tenants.

  2. SR says:

    December 4th, 2008 at 4:43 pm

    We are seeing consumers remain fairly confident and are still buying… except for 2 sectors — real estate and auto. It will be a tough time for real estate in the next 6-12 months as consumers take a wait and see attitude. Good time for tenants.

  3. Kris says:

    December 4th, 2008 at 7:47 pm

    What about the market for serviced offices like executive centres and business centres, as well as serviced apartments? Will there be more demand as people shy away from purchasing or long term leasing? It seems those firms might have a chance to expand in this market.

  4. Rich says:

    December 4th, 2008 at 11:32 pm

    SR

    Cars and real estate are big items in the economy.

    Where I am going to be interested in my observations is in where consumers spend, and what level of savings they are willing to spend. I have spoken with several brands (retail) that are shaving estimates. Not anything like US, but certainly a reduction in their plans just 6 months ago.

    R

  5. Rich says:

    December 4th, 2008 at 11:34 pm

    SR

    Would agree it is a good time for tenants. I know of people renegotiating terms right now, and they are getting 10-25% reduction depending on usage and location. Landlords are worried about loosing 100% cash flow, and know new entrants are limited. I am not saying anyone should take advantage of this situation, but then again… the landlords on Nanjing Road have been a real pain for the last 3 years and probably didn’t feel that bad about their rents or terms.

    R

  6. Rich says:

    December 4th, 2008 at 11:37 pm

    Kris

    Good question. The general market for hospitality is way off right now, however for prefab warehousing (think ProLogis) the situation appears to be a good one as people walk away from making their own capital investments.

    R

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