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Expo property bounce predicted
March 25, 2010, Thursday
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AN interview with Joanna Tan, general manager of Joanna Real Estate, about what impact the World Expo 2010 will bring to Shanghai real estate market.
Q: Investors and property owners are saying World Expo 2010 will be a huge boost to Shanghai's economy, especially in the real estate sector. What is your view?
A: There is no doubt it will boost real estate development, which can be illustrated in the three stages:
1. Pre Expo: As we know, the Expo theme is "Better City, Better Life," indicating the importance of city development, which is based on the infrastructure construction. For better Expo operation, infrastructure construction, including mass transit, has been completed 10 years ahead of schedule. Also the Expo concept is always an important factor, encouraging buyers and investors as the economy warms.
2. During Expo: The World Expo bid office estimates the World Expo 2010 Shanghai will receive around 200 exhibiting countries and international organizations, and will host 70 million people. This is an average of 400,000 visitors daily and a maximum of 600,000 per day. This means large expansion opportunities for star-rated hotels, economy hotels, serviced apartments and other residential properties.
3. Post Expo: Expo 2010 will mainly exert long-term influence on the real estate sector. After the Expo, most pavilions will be demolished and that area, 4-5 square kilometers, will be used to build high-end office buildings and residential properties, including both public architectural complexes and landmark architecture. These buildings will then become a new symbol for Shanghai.
Q: Can you estimate the Expo-related rise in the high-end residential property market?
A: According to statistics, among the 70 million people coming to Shanghai, 5-10 percent are foreigners, or around 3.5-7 million. Of course, not all are high-end clients; economy hotels will largely absorb the flow, but even a share of 5 percent of the total foreigners would still represent a large increase.
Q: Then how does your company prepare for this significant moment?
A: First, we will continue strengthening our relationships with landlords and large developers, so that our massive property database can be the most up to date. That will give us greater advantage to fight for a better price for our clients by using our well-honed professional negotiation skills. This is because everybody knows that when the time comes, the value of properties around the Expo site will rise significantly, and so will the rental prices.
Second, from the aspect of our service and staff training, we are gradually reinforcing service quality. The training covers attitude toward service and professional knowledge. For example, aside from routine meetings for new employees; a test paper is an extra check for real estate knowledge. The test is also given regularly to every property consultant.
For us this does not only represent World Expo, but also Chinese culture and our company culture, and we will use it to show Expo visitors the quality of Shanghai property management.
Third, we are considering embarking on short-term and medium-term relocation services, such as leasing serviced apartments and hotel apartments, which was not originally our main focus. And we may shift to this area for the time being to capture the huge opportunity to expand.
Q: During the World Expo 2010, you and companies like yours will face challenges as well as opportunities. How do you analyze this?
A: Opportunities will always come with challenges. Even though risks or challenges exist, we can still capture the opportunity. The Expo is a rare opportunity for us to promote our brand and increase our market share. We are already the largest residential agency nationwide, and this new challenge will only strengthen our courage for further advancement in the market and make us take greater strides forward.
Q: In the pre-Olympic stage, many landlords surrendered to the expectations of a large influx in the number of foreigners seeking short-term leasing and increased their prices, causing a very high vacancy rate. Do you think a similar situation will occur here?
A: I don't think so. Out of security considerations, Beijing had implemented a strict visa policy. The Expo Shanghai is a pageant for the economy and science and technology. The Expo's focus has a longer and larger influence for real estate and other relevant sectors.
According to statistics, the number of visitors to the Expo will be around 10 times larger than the number for the Beijing Olympics. Moreover, the main form is long-term demand, rather than short-term demand, so I think what you are referring to won't happen again.
Q: Experts have predicted that after World Expo 2010, a valley effect will occur due to insufficient demand and the high-end residential market may be depressed in a certain way. What's your strategy to address this?
A: Our strategy is to attach equal importance to both long-term and short-term leasing. We will never acquire short-term leasing at the cost of long-term leasing, which is commensurate with killing the goose that lays the golden egg. Long-term service is our main business and the source of old clients generating larger business turnover.
Speaking of the valley effect, it will certainly occur as foreigners migrate back and forth, but I don't think it will be as serious and long as that of post-Beijing Olympics. It will just linger for a short time, maybe for several months, because the post-Expo influence on the real estate sector would be larger than the pre-Expo and dur-Expo stages. After the Expo, with the demolition of most pavilions and new land supply, it will be time for the real estate market to thrive.
For more information, check www.jrecorporate.com.
Q: Investors and property owners are saying World Expo 2010 will be a huge boost to Shanghai's economy, especially in the real estate sector. What is your view?
A: There is no doubt it will boost real estate development, which can be illustrated in the three stages:
1. Pre Expo: As we know, the Expo theme is "Better City, Better Life," indicating the importance of city development, which is based on the infrastructure construction. For better Expo operation, infrastructure construction, including mass transit, has been completed 10 years ahead of schedule. Also the Expo concept is always an important factor, encouraging buyers and investors as the economy warms.
2. During Expo: The World Expo bid office estimates the World Expo 2010 Shanghai will receive around 200 exhibiting countries and international organizations, and will host 70 million people. This is an average of 400,000 visitors daily and a maximum of 600,000 per day. This means large expansion opportunities for star-rated hotels, economy hotels, serviced apartments and other residential properties.
3. Post Expo: Expo 2010 will mainly exert long-term influence on the real estate sector. After the Expo, most pavilions will be demolished and that area, 4-5 square kilometers, will be used to build high-end office buildings and residential properties, including both public architectural complexes and landmark architecture. These buildings will then become a new symbol for Shanghai.
Q: Can you estimate the Expo-related rise in the high-end residential property market?
A: According to statistics, among the 70 million people coming to Shanghai, 5-10 percent are foreigners, or around 3.5-7 million. Of course, not all are high-end clients; economy hotels will largely absorb the flow, but even a share of 5 percent of the total foreigners would still represent a large increase.
Q: Then how does your company prepare for this significant moment?
A: First, we will continue strengthening our relationships with landlords and large developers, so that our massive property database can be the most up to date. That will give us greater advantage to fight for a better price for our clients by using our well-honed professional negotiation skills. This is because everybody knows that when the time comes, the value of properties around the Expo site will rise significantly, and so will the rental prices.
Second, from the aspect of our service and staff training, we are gradually reinforcing service quality. The training covers attitude toward service and professional knowledge. For example, aside from routine meetings for new employees; a test paper is an extra check for real estate knowledge. The test is also given regularly to every property consultant.
For us this does not only represent World Expo, but also Chinese culture and our company culture, and we will use it to show Expo visitors the quality of Shanghai property management.
Third, we are considering embarking on short-term and medium-term relocation services, such as leasing serviced apartments and hotel apartments, which was not originally our main focus. And we may shift to this area for the time being to capture the huge opportunity to expand.
Q: During the World Expo 2010, you and companies like yours will face challenges as well as opportunities. How do you analyze this?
A: Opportunities will always come with challenges. Even though risks or challenges exist, we can still capture the opportunity. The Expo is a rare opportunity for us to promote our brand and increase our market share. We are already the largest residential agency nationwide, and this new challenge will only strengthen our courage for further advancement in the market and make us take greater strides forward.
Q: In the pre-Olympic stage, many landlords surrendered to the expectations of a large influx in the number of foreigners seeking short-term leasing and increased their prices, causing a very high vacancy rate. Do you think a similar situation will occur here?
A: I don't think so. Out of security considerations, Beijing had implemented a strict visa policy. The Expo Shanghai is a pageant for the economy and science and technology. The Expo's focus has a longer and larger influence for real estate and other relevant sectors.
According to statistics, the number of visitors to the Expo will be around 10 times larger than the number for the Beijing Olympics. Moreover, the main form is long-term demand, rather than short-term demand, so I think what you are referring to won't happen again.
Q: Experts have predicted that after World Expo 2010, a valley effect will occur due to insufficient demand and the high-end residential market may be depressed in a certain way. What's your strategy to address this?
A: Our strategy is to attach equal importance to both long-term and short-term leasing. We will never acquire short-term leasing at the cost of long-term leasing, which is commensurate with killing the goose that lays the golden egg. Long-term service is our main business and the source of old clients generating larger business turnover.
Speaking of the valley effect, it will certainly occur as foreigners migrate back and forth, but I don't think it will be as serious and long as that of post-Beijing Olympics. It will just linger for a short time, maybe for several months, because the post-Expo influence on the real estate sector would be larger than the pre-Expo and dur-Expo stages. After the Expo, with the demolition of most pavilions and new land supply, it will be time for the real estate market to thrive.
For more information, check www.jrecorporate.com.
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