WWC TianjinCityProfile Nov13 Eng

8/13/2019 WWC TianjinCityProfile Nov13 Eng

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WORLD WINNING CITIES

Global Foresight Series 2013

Chinas City WinnersTianjin City Profle


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2 Chinas City Winners

Chinas City Winners: Tianjin

Jones Lang LaSalles ViewWhen we published our rst World Winning Cities prole in 2006,

Tianjin was a city with a strong but generic industrial base, a

decent port and some tired real estate stock. Times have certainly

changed, although international real estate investors have been slow

to get the message.

Since 2007, the economy has more than doubled in size and the

city is now home to what is arguably Chinas largest aerospace

manufacturing cluster. As the industrial base has continued to growother sectors such as tourism have taken off. Multiple ve-star

hotels dot the riverside and Tianjins former Italian concession is

now a popular pedestrian retail area. The rusting skeletons of half

completed ofce projects that used to dot the skyline have been

replaced by iconic ofce towers and retail centres.

We understand why the city has its sceptics. When a city of 13

million doubles the size of its modern residential and commercial

stock all within just a few short years - it looks like a bubble from

almost every angle. However we have observed that when a city

of this size retools, the overcapacity created short term can be

absorbed in mammoth cycles of take up that follow.

One of the most puzzling aspects of the current cycle is the lack of

quality ofce space. The construction of ofce buildings is currently

dominated by domestic developers who almost exclusively sell them

strata title. As a result, the leading ofce towers have maintained

occupancy rates in excess of 90% and MNCs have few options for

expansion.

Tianjins Binhai New Area is another example of a little understood

and poorly marketed area that has not helped the citys image.

Central to Tianjins economy, but located on its eastern edge, the

key industrial area has been widely panned for its attempt to create

the Yujiapu Financial District. Some of the criticism is well deserved,

but projects with 20 year timelines seldom look great only three

years into the development cycle. No one expects Tianjins Yujiapu

to rival Shanghai or Hong Kong, but a city of 13 million should be

able to successfully create a district with a core nancial component,

provided the government rst invests in the infrastructure, seeds it

with SOEs and layers on nancial incentives.

Tianjin sceptics will continue to abound, but just as the leaders of

Tianjin have nally worked out how to leverage their industrial andpopulation base, some investors are positioning themselves to take

advantage of one of Chinas fastest growing economies.

HAINAN

TAIWAN

JILIN

HEILONGJIANG

LIAONINGHEBEI

INNER MONGOLIA

HEBEISHANXI

JIANGSU

ZHEJIANG

FUJIAN

ANHUI

SHAANXI

HUBEI

HENAN

NINGXIA

QINGHAI

XINJIANG

TI BE T

SICHUAN

GUIZHOU HUNAN

JIANGXI

GUANGDONGGUANGXI

YUN NAN

GANSU

SHANDONG

Tier 1 Core

Tier 1.5 Transitional

Tier 2 Growth

Tier 3 Emerging

Suzhou

Ningbo

Shanghai

Wuxi

Wuhan

Tianjin

BeijingDalian

Nanjing

Jinan

Shenzhen

DongguanGuangzhou

Shenyang

ZhengzhouXian

HefeiHangzhou

ChengduChongqing

Changsha

Qingdao

Taipei

MacauHongKong

Xiamen

Nanning

Kunming


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Tianjin in Numbers

Tianjin City Prole 2013 3

Economic Dashboard

Size

Tianjin Beijing Chengdu Shenyang Chongqing

Area (sq km) 11,920 16,411 12,120 13,000 82,403

Permanent

Population

(million)

13.5 20.7 14.1 8.1 28.9

RegisteredPopulation

(%)

74 64 81 89 114*

GDP

(RMB billion)1,288 1,780 814 670 1,146

Growth

GDP

(% y-o-y)13.8 7.7 13.0 11.0 13.6

Permanent

Population

(% pa 2005-2011)

2.5 3.1 -0.1 -0.6 7.3

Infrastructure

Air Passengers(millions)

8.1 81.9 31.6 11.0 22.1

Openness

FDI

(USD billion)13.1 6.4 4.9 5.1 6.3

Note: Values are for 2012

* Chongqing has a signicant number of registered citizens working outsideof the city, which results in this high number.Source: National Bureau of Statistics of China

Tianjins Competitive Position

Vital Statistics

1 1st in China for GDP growth rate (2010, 2011 and 2012)

1 1st in China for dynamic growth potential (2012)

4 4th in China for government transparency (2012)

4 4th in China for attractiveness of property development (2012)

4 4th in the world for GDP growth rate to 2025 (2011)

5 5th in China for development potential (2011)

12 12th in the world for total GDP by 2025 (2011)

Source: China Institute of City Competiveness; Chinese Academy of SocialSciences; Jones Lang LaSalle


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expansion in recent years. According to the municipal governments

12th Five-Year Plan, Tianjin aims to boost advanced manufacturing

industry and to also accelerate the development of a modern

services sector, the latter of which is projected to contribute to half of

the citys total GDP by 2015.

Tianjins expanding urban area

With a total area of 11,920 sq km, Tianjin comprises 12 districts,

three counties and the Tianjin Binhai New Area (TBNA), which

constitutes a sub-provincial city. In terms of economic and real

estate development, the citys key geographic areas are as follows:

Central Tianjin(comprising of Heping, Hexi, Nankai, Hedong,Hebei and Hongqiao Districts) is the citys main business area.

It is where most multinational services rms and retailers,

as well as its main commercial property developments, are

concentrated.

TBNA, with an area of 2,270 sq km, is (after Central Tianjin) the

citys second strongest area for real estate and manufacturing

activity. Its a key economic engine for the city, consistently

reporting economic growth in excess of 20% per year since

2006. Within the TBNA, areas that are witnessing major

development include:

Tianjin Economic-Technological Development Area

(TEDA). One of the rst state-level development areas

approved by the State Council of the PRC, TEDA has

established itself as the most important manufacturing

base in Tianjin, and is now dominated by international

manufacturing giants such as Samsung, Motorola and

FAW-Toyota. Currently, all of the Grade A ofce space in

the TBNA is located within the TEDA Modern Service District

(TEDA MSD), the rst phase of which was completed in2011. Several reputable local and domestic developers have

launched high-end residential projects in the area, including

Vantone Central Park, Vantone Mansion and Warner

Garden.

Yujiapu Financial District.Covering a land area of some

3.86 million sq m, the district has 120 planned plots which

will equate to a total construction mass of around 9.5 million

sq m, of which over 50% has been allocated for ofce

space. Positioning itself as the nancial innovation centre

for Northern China, this large-scale project commenced its

four-phase construction in 2009; no exact date has been set

for its completion.

City Overview

One of the worlds fastest growing cities

Tianjin is located in Chinas north-eastern Bohai Bay area, about

140 km south-east of Beijing. It is one of the four municipalities of

the Peoples Republic of China along with Beijing, Shanghai and

Chongqing. In recent years, Tianjin has experienced extraordinary

economic development at a rate faster than the national average,

earning the accolade as one of the worlds fastest growing large

cities. Its growth has been underpinned by massive infrastructure

investment, high levels of foreign direct investment and strong policy

support from central government as one of the countrys key national

growth poles. According to Jones Lang LaSalles China50 research

report, Tianjin has the highest level of economic development

outside of Chinas Tier 1 Cities.

With a coastline that stretches approximately 153 km, Tianjin has the

biggest port in Northern China, which has and continues to fuel the

expansion of the citys trade, shipping and logistics sectors. The city

is also the largest industrial centre in the region, with manufacturing

the main contributor to the local economy. Tertiary industries, such

as nance and business services, have also experienced rapid

City Evolution: Economy Score Improvements, 2009 - 2012

Source: China50, Jones Lang LaSalle

Tianjin

Suzhou

Wuhan

Chongqing

Hangzhou

Nanjing

Chengdu

Dalian

Shenyang

Dongguan

Changsha

Wuxi

Qingdao

Jinan

Ningbo

Xian

Foshan

Hefei

Zhengzhou

Changzhou

Low

2009 2012

High


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Source: Tianjin Municipal Statistics Bureau

2011 GDP

2011 Population

Area

TBNA

Central Tianjin

Other Districts

Greater Tianjin


Area

(sq km)

2011 GDP

(RMB billion)

2011

Population

(million)

TBNA 2,270 620.7 2.5

Central Tianjin 173 231.7 4.5

Other Districts and

Counties

9,460 278.3 6.5


Sino-Singapore Tianjin Eco-City (SSTEC).A joint venture

between a consortium of Singapore and Chinese companies,

SSTEC is a planned 30 sq km sustainable residential

model city designed to create a liveable and eco-friendly

community for 350,000 residents by 2020. Thus far, the

overall scheme has attracted recognised developers from

across the globe, including Mitsui Fudosan Residential Co.,

Ltd. (Japan), Sunway City Berhad (Malaysia), Samsung

C&T Corporation (Korea) and Ayala Land, Inc. (Philippines).

SSTEC will be providing the infrastructure and amenities,

which will include education and medical facilities, as well as

retail areas.

Haihe River

Tianjin Outer Ring Road

Tianjin Inner Ring Road

High Speed Railway Line

Central Tianjin

Greater Tianjin

JIXIAN

COUNTY

BAODI

DISTRICT

WUQING

DISTRICT

BEICHEN

DISTRICT

DONGLI

DISTRICT

XIQING

DISTRICT

NINGHE

COUNTY

JINNAN

DISTRICT

JINGHAI

COUNTYBINHAI

NEW AREA

HEPING

HEBEIHONGQIAO

NANKAI

HEXI

HEDONG


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Tianjins Districts and Counties (2011)


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

39%

60%

Primary Secondary Tertiary

Million

20112005


Tianjins Employment Structure

Sector Trends


Industry Primary Secondary Tertiary

Trend Decreasing signicantly Increases slowing down Increasing sharplyFactors Mechanisation of farms reduces the need

for farm workers. Rural workers migrate tourban area

Workers prefer better paid and lessphysically demanding jobs in thesecondary or tertiary sectors

Tianjin has developed into North Chinaslargest industrial centre. The secondarysector is currently the major contributor

to Tianjins economy providing manyemployment opportunities

The progress of science and technologygreatly improve labour productivity andpromote the optimisation and upgrade ofTianjins industrial structure.

As Tianjin matures, services like health,education and tourism are becomingmore crucial; workforce demand in thesesectors grows rapidly

More and more foreign banks andprofessional services rms enter Tianjinto open branches, adding employmentopportunities

Producer services for the manufacturingindustry also enjoy rapid development and

create many employment opportunities,

e.g. scientic research and technicalservices

Demographics and Employment

Tianjins total permanent population stood at 13 million by end 2011,up 30% since 2005 - an addition of an average 0.6 million new

residents per year over the period. When compared to 2001-2005

and its 4% expansion, the population growth rate has rocketed.

According to the Sixth Population Census, Tianjin is one of the

fastest growing cities in terms of permanent population, and is

ranked fth for its growth rate among Greater Chinas cities.

District Permanent

Population

000s

GDP

RMB billion

Central Tianjin Heping District 303.1 57.747

Hedong District 889.8 25.406

Hexi District 901.0 58.513

Nankai District 105.54 48.001

Hebei District 805.3 29.198

Hongqiao District 546.9 12.868

TBNA 2536.6 620.687

Suburban Dongli District 635.4 60.281

Xiqing District 741.3 59.550

Jinnan District 629.8 37.997

Beichen District 704.3 56.299

Wuqing District 1005.1 45.551

Baodi District 831.2 32.333

Others Ninghe County 431.0 22.495

Jinghai County 674.3 34.366

Jixian County 855.3 25.011

The surge in people numbers is reected in the escalation in the size

of Tianjins labour force which had reached over 7 million by 2011,

an increase of 41% since 2005. The workforce employed in the

tertiary sector has experienced even greater growth, rising by over

60% since 2005.


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Economic Background

Double-digit growth since 2004

Tianjins economy has maintained double-digit growth since 2004,

with average GDP growth above 15%, signicantly higher than

the national average. According to data released by the Tianjin

Municipal Statistics Bureau, the citys GDP reached RMB 1,289

billion in 2012, an increase of 13.8% on 2011. Although this is a

slowdown on the 16.4% achieved in 2011, the growth rate is still

nearly double the national average and the highest in the country.

By the end of 2012 per capita GDP in Tianjin stood at more than

US$14,800.

The citys economic boom is expected to maintain its strong upwards

trajectory, driven by infrastructure spending in the short term and the

development of the TBNA over the longer term. The success of the

TBNA, as one of citys main economic development zones, can be

measured by its generation of 55.9% of the citys GDP in 2012 and

the 20% + year-on-year GDP growth, and also, comparatively, by

the fact that its growth rate has surpassed Shanghais Pudong New

Area.

Secondary industries continue to dominate

Tianjin is Northern Chinas largest industrial centre with pillar

industries in automobile, micro-electronics and biomedicine. The

tertiary sector experienced rapid growth of 12.4% in 2012 and

accounted for 47% of the citys total GDP, yet despite these strong

gures, the secondary industry remains the main driver of the

citys economy, reected in its proportion of secondary industries,

which is larger than the average for Chinas coastal provinces and

municipalities.

Attracting domestic and foreign retailers

Tianjins total retail sales of consumer goods grew by 15.6% in 2012

to reach RMB 392.1 billion, which puts it at the forefront of rankings

for retail growth among Chinas principal cities. With Tianjins more

attractive city offer and rising shopper afuence, it has rapidly taken

on greater market signicance, and this has been reected in the

arrival of a large number of major retailers in recent years, such as

IKEA, COFCO Joy City, Lotte Department Store and Walmart.

Tianjins GDP Growth 2005-2012


Tianjins GDP by Industry, 2005-2012



GDP Growth Rates Compared, 2012

0%

5%

10%

15%

20%

25%

0

200

400

600

800

1,000

1,200

1,400

2005 2006 2007 2008 2009 2010 2011 2012

GDP Growth Rate

RMB

billion

0%

Tianjin

Chon

gqing

Chen

gdu

Xian

Shen

yang

Qing

dao

Guan

gzho

u

Shen

zhen

Beijin

g

Shan

ghai

3%

6%

9%

12%

15%

55.2%

43.0%

0%

20%

40%

60%

80%

100%

2005 2006 2007 2008 2009 2010 2011 2012

Primary Secondary Tertiary

2.9%

54.7%

42.5%

2.3%

55.1%

42.6%

2.1%

55.1%

42.8%

1.7%

53.0%

45.3%

1.8% 1.6%

53.1%

45.3%

1.4%

52.4%

46.2%

1.3%

51.7%

47.0%


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Now in its 12th Five-Year Plan, Tianjin is shifting from growth and

quantity to development and quality, and a key element within its

plans is the improvement of the citys living environment through the

establishment of three particular zones whose primary objective is

ecological and environmental protection. These zones, dispersed

from the north to the south of the city, take advantage of the Jixian

mountain regions and the areas existing wetlands, and are looking

to attract real estate development interests, particularly residential.

Airport expansion

Tianjin Binhai International Airport is located in the Dongli District, 13

km from the city centre, and in 2012 it had a passenger throughput

of 8.1 million, an increase of 7.3% on 2011. Terminal One,

which opened in April 2008, has an annual capacity of 10 million

passengers; having received formal approval from the National

Development and Reform Commission in 2010, phase two of the

airports development is underway with the completion of a 220,000

sq m second terminal anticipated for 2014. This is expected to

double the passenger capacity of the airport, which will both meet

the aggressive growth in demand and turn the city into the most

important air cargo transportation and distribution hub in North-East

Asia.

Tianjin West Station redevelopment

Located in Hongqiao District, the new Tianjin West Railway Station,

which opened in June 2011, has become one of the largest

integrated transportation hubs in China combining the Beijing-

Shanghai (Jinghu) high-speed railway with the Tianjin Metro and

local Mass Transit systems.

The stations inuence on the vicinity has begun to take effect, with

land values reported to have risen by more than 200% over three

years. The municipal government is planning for the area to becomea secondary commercial submarket to include ofce, retail and

serviced apartment developments, and major developers such as

TEDA Group, Vantone Real Estate and the Lujiazui Development

Group from Shanghai are already active in the area.

High-speed rail connections

As of 2012, there are two main high-speed railway lines running

through Tianjin, connecting to Beijing, Shanghai and other major

Chinese cities. The increased connectivity between Tianjin and

other urban centres is a critical component to the ongoing economic

development of the citys economy.

Urban Planning and Infrastructure

Focusing on development and quality

In its overall urban planning for the period 2005-2020, the Tianjin

Municipal Government laid out a sizeable list of tasks to be

accomplished. One of the most important was to develop two new

secondary commercial zones to the north-west and south-east of

Central Tianjin, namely Wuqing New Town and Tianjin Binhai New

Area (TBNA). Situated between Beijing, Central Tianjin and Bohai

Bay, these commercial zones were planned so as to leverage

existing economic activities in the two major cities, all interconnected

through a series of Bejing-Tianjin-Tanggu expressways.

Three Axes

Two Belts

Six Plates

Jixian County

Baodi District

Wuqing District

City Center

Ninghe County/Hangu

TBNA Core Area

Jinghai CountyDagang

East:To develop the port and the city towards the sea

South:To move the chemical industry to Dagang in the south

West: To integrate each functional zone along Jinbin Corridor

North:To improve the ecological environment of Hanggu in the north

Middle:To promote the comprehensive service functions of the core

City Spatial Structure


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Beijing-Tianjin high-speed railway

The 115 km high-speed railway line was completed in August

2008, and has reduced travel time between Tianjin and Beijing to

just 33 minutes. Following the route of the Beijing-Tianjin-Tanggu

Expressway, the line has greatly enhanced the citys connectivity,

encouraging the development of tourism and other tertiary

industries, and improving business cooperation and communications

between the two cities.

Beijing-Shanghai (Jinghu) high-speed railway

In June 2011, Tianjin was joined to the Jinghu high-speed railway

line, connecting it with Beijing and Shanghai, as well as the

provinces of Hebei, Shandong, Anhui and Jiangsu. Currently, there

are 14 high-speed trains to Shanghai Hongqiao station daily with a

travel time to Shanghai of about ve hours; ve of the trains start

from Tianjin West Station.

Tianjin-Qinhuangdao (Jinqin) high-speed railwayThe Jinqin high-speed railway, which is expected to be completed in

August 2013, will run across the Bohai Sea region and be a key line,

linking other parts of Chinas railway network with the high-speed

system, and thereby improving connectivity between north-east,

north and south China.

Expressway connectivity

Seventeen expressways have been established in Tianjin, and

the key roads within its regional network currently include: Tianjin-

Beijing-Tanggu Expressway; Tianjin-Jixian Expressway; Tianjin-

Baoding Expressway; Rongwu Expressway; Central Avenue

running through Hangu, Tanggu and Dagang; and Tianjin Avenue

connecting Central Tianjin and Binhai New Area.

North Chinas largest port

Tianjin Port:Approximately 170 km from Beijing and 60 km from

Central Tianjin, Tianjin Port is one the countrys most important

commercial ports due to its strategic location on Bohai Bay. As one

of the main shipping hubs on the Chinese coast, it provides links

to more than 400 ports in over 180 countries, and in 2012 handled

476 million tons of cargo and 12.3 million TEU of containers,

making it the worlds fourth largest port by throughput. Its capacity is

increasing at a rapid rate, and by 2017 the port is expected to handle

600 million tons.

Beijing - Tianjin Rail and Highway Infrastructure

Haihe River

Inner Ring Road

Outer Ring Road

Beijing-Shanghai High-speed Rail

Beijing-Tianjin Expressway

Beijing-Tianjin-Tanggu Expressway

Beijing-Shanghai Expressway

Beijing-Tianjin Inter-city Rail

Tianjin Avenue

Beijing

Tianjin


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Tianjin Metro Map (Central Tianjin)


Key projects in Dongjiang Port

Dongjiang Port:An extension of Tianjin Port, Dongjiang Port has

been built on reclaimed land and is part of the plan to develop

the Tianjin Binhai New Area (TBNA) into a shipping and logistics

centre for Northern China. The peninsula has a total area of

around 30 sq km and has zones designated for dock operations,

logistics processing and auxiliary services, the latter of which will

accommodate the development of commercial, residential, tourist

and leisure facilities.

The development of the Metro

In 2008, the municipal government established a 10-year blueprint to

build a metro network comprised of more than 10 lines to serve both

Central Tianjin and the TBNA. Increasing road congestion and the

consequent net economic cost, as well as the human toll through a

high road-trafc accident rate, have all contributed to the promotion

of metro lines as the optimum passenger transport solution to also

meet the citys escalating population growth and the expansion of its

working and living areas.

The Tianjin metro network incorporates a mixture of hub-and-spoke

and linear networks that connect Tianjins developing and existing

commercial areas. Subway Lines 2, 3 and 9 converge at Tianjin

Station, which is the main transportation hub for the city, while Lines

6, 7 are the outer linear lines that circle around the hub. However,

even with an adopted blueprint, completion of these metro lines

has been slow, stalled by relocation and construction issues. The

Tianjin International

Cruise Home Port

South of the service zone, serving cruise linesfrom Japan and Korea

Includes ofces, hotels, serviced apartments, anexhibition centre and shops

Ocean One Southeast of the service zone

Includes a hotel, residential, marina club, shops,and a pedestrianised street along the water

Line No. 5

Line No. 4

Line No. 1

Line No. 2

Line No. 3

Line No. 7

Line No. 6

Line No. 9

Line No. 8


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-

-

Tianjin City Centre

1

29

Haihe River

HaiheRiver

Haihe River

3 TBNA40km

Liuyuan

XihengdiGuojiuchang

Benxilu Qinjiandao

Honghuli

West Train Station

XibeijiaoXinan

jiao

Yananxilu

Caozhuang

J ieyuanxidao Hong-qilu

Xianyanglu

Guang-kaisimalu

Gulou

Erweilu

Haiguangsi

Dong-nanjiao

Anshan-dao

Hepinglu

JinwanPlaza

Jianguodao

JinshiBridge

Zhongshanlu

North Station

Tiedonglu

Zhangxingzhuang

Yixingfu

Puyu Park

Jinwei Road

Fengchan River

Xiaodian

TianjinStation

Xinkailu

Dawang-zhuang

Zhigu

Shiyiji-nglu

Dongxinglu

Zhongshanmen

YihaoBridge

ErhaoBridge

Zhangguizhuang

Xinli

Dongli

EconomicDevelopmentZone

Xiaodong-zhuang

Junliangch-

Gangguangongsi

eng

Gangguangongsi

Hujiayuan

Chezhan-beilu

Tanggu

TEDA Citizen Plaza

BinhaiCollege

Huizhanzhongxin

Donghailu

Jingjianglu

ShunchiBridge

Cuifuxin-cun

Helanlu

Dengzhoulu

Guoshanlu

Tianjin AirportEconomic Zone

TianjinBinhaiInternational Airport

Ying-koudao

Xiaobailou

XikangluWujiayao

Tianta

ZhoudengMemorial Hall

HongqinanluWangdingdi

Huayuan

University City

Hi-Tech Zone

Xiawafang

NanlouTucheng

Chentangzhuang

Fuxingmen

HuashanliShuanglin

TianjinUniversityof Finance&Economics

Tianjins Metro System 2013


updated and extended Line 1 was already operating prior to the

2008 blueprint but by 2012, only an additional three metro lines

- 2, 3 and the extended 9 - had begun successful operation.

Over the last few years, the areas around Line 1 stations have

become integrated commercial zones, hosting a number of

business, administrative and retail operations. Within these zones,

Nanjing Road and Xiaobailou are among the major ofce and retail

submarkets that have achieved the highest rents and capital values.

Along the other newly-operating lines, the associated commercial

zones are expected to witness a similar growth in real estate

activity, and looking further ahead, the continued development of

Tianjins metro network will help to accelerate economic activity in

several districts and reduce the differences in population distribution

between developed and less developed districts.

Current Metro lines

By early 2013, four metro lines were in operation linking the current

major commercial areas in Central Tianjin:

Line 1 runs from north-west Tianjin to the east via the city centre,

and serves Beichen, Hongqiao, Nankai, Heping, Hexi, and

Jinnan Districts. Line 1 enables Tianjin residents to travel to

the citys main commercial areas, such as Nanjing Road and

Xiaobailou.

Line 2 travels from east to west through Central Tianjin, and

crosses the Old Town Area, a key residential and commercial

area.

Line 3 connects Xiqing District in the south and Hebei District in

the north, and runs through key new residential and commercial

areas.

Line 9, with a starting point at Tianjin Station, is the primary metro

line connecting Central Tianjin to TBNA in a reduced travel time

of only 45 minutes.

Since October 2012, the connection of metro lines 2, 3, and 9, has

resulted in Tianjin Station becoming the primary hub for all public

transportation in the city, providing, in addition, the onward link to

Beijing through the high-speed rail line.


12/24


aviation, petrochemical, heavy machinery, electronic information,

biomedical, new energy and defence technology. Early evidence

that the plan is bearing fruit is shown by a near 15% increase in

Tianjins industrial production in 2012. Much of the output growth has

come from new projects coming on line; for instance, the launch of

a new mobile phone facility for Samsung, and the expansions of the

Great Wall Motor Company and the helicopter division of the China

Aviation Industry Company.

For the tertiary sector, the goal is for it to increase its contribution

to 50% of the citys total GDP by 2015. One of the main tactics is

to develop additional services specic to manufacturing industries;

for instance, professional services in the form of computer and

data processing, accounting/auditing, consulting, advertising and

engineering companies. This has resulted in companies such as

Industrial Bank of Taiwan, Halliburton and Cameron Pace Group (a

leader in 3-D technology and production services) already setting up

ofces in Tianjin.

Development of TBNA

In 2006, the State Council of the PRC selected the TBNA as one ofthe rst regions in China to pilot a nancial reform programme, and

Core Activities

Huge strides in economic development

Tianjin has made huge strides in its economic development, with

double-digit growth on GDP, retail sales and FDI over the past

ve years. According to the municipal governments 12th Five-

Year Plan, the main agenda for 2011 to 2015 includes continued

economic growth; the transformation of the citys economic structure;

an improvement in Tianjins ecological, social and cultural living

environment; and a particular emphasis on the development of the

Tianjin Binhai New Area (TBNA).

Sustained economic growth

According to the Five-Year Plan, released by mayor Huang Xingguo

in January 2012, the government has set an annual GDP growth

rate of 12% for the ve years, 2011-2015. The city is already

outperforming this projection with rates of 16.4% in 2011 and 13.8%

in 2012, and although it may cool to a slower rate, double digit

growth is expected to be maintained through to 2015.

Transformation of the economic structure

The government plans to expand and strengthen both the secondary

and the tertiary sectors. For the secondary sector, the focus will be

placed on higher-value-added manufacturing industries such as


13/24

Tianjin Foreign Direct Investment, 2005-2012

Source: Tianjin Municipal Statistic Bureau

3.3 4.15.3

7.49.0

10.8

13.115.0

15.0%

0%

10%

20%

30%

40%

50%

0

5

10

15

20

2005 2006 2007 2008 2009 2010 2011 2012

Foreign Direct Investment Growth

USD

billion


encouraged the local governing body to promote major pilot reforms

of nancial enterprises, businesses and markets within the economic

development zone. Advantageous tax incentives and innovative

nancial structures were tested in the TBNA by companies

registered in the area, the main goal being to encourage private

equity investment through various government-backed industry

investment funds.

At the end of 2007, the largest domestic government-guided

venture investment fund, the Binhai New Area Venture Capital

Steering Fund, was launched. The RMB 2 billion fund was designed

to act as a parent fund to attract domestic and foreign venture

capital organisations to the TBNA, while part of it was used to helppush ahead with the construction of 12 scientic research and

development centres for Tianjins pharmaceutical, biological, aviation

technology and other industries.

One of the key steps in this development was the creation of the

Tianjin Innovative Finance Investment Co., Ltd. TIFI, as it is also

known, was incorporated with a capital of RMB 2 billion and is the

operator of the overall planning, construction and management of

Yujiapu Financial District (YFD), and currently manages over RMB

20 billion of assets. TIFIs role is to provide construction and nancialsolutions and to also help secure favourable policies for YFDs

investors and developers, by taking advantage of its privileged

access to funding from central government and commercial lenders.

Business EnvironmentHigh levels of FDI

The Tianjin municipality has impressed investors with its growth

potential and, accordingly, FDI has increased steadily in recent

years at a pace above 10% per annum (2005 to 2012), one of the

fastest growth rates among Chinas cities. Total FDI reached US$13

billion in 2011 which equated to an impressive 20% year-on-year

growth rate. A large portion of this investment has come off the back

of strong fundamentals and the potential derived from the citys

traditional industrial focus on equipment manufacturing, automobiles,

electronic information and petrochemicals.

Since our last report in 2006, Tianjin has also established additional

industrial clusters in aerospace and new energy, and moreover, by

end 2012, some 150 of Fortune Global 500 companies had set up

subsidiaries or manufacturing bases in the city.


14/24


Continued vigour in Tianjins real estate markets comes at the

same time as administrative measures are being enforced to cool

investment in this sector, and based on factors such as investment

volumes, development activity and retailer concentrations, Tianjins

real estate market still ranks below other Tier 1.5 cities such as

Chengdu, Shenyang, and Chongqing. However, the arrival of several

new department stores and shopping centres are transforming the

citys prime retail districts into more diverse and attractive shopping

destinations. Thus, given the level of central government support for

the municipality, and the fact that the development of its property

market still lags behind many other Tier 1.5 cities, Tianjins real

estate sector should have more than enough potential to continue its

growth over the coming years.

Rapid real estate development

Real estate development in Tianjin continues to be one of the

largest and fastest-growing xed-asset investment categories, with

investment remaining exceptionally and consistently strong through

the recent stimulus cycle.


0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2007 2008 2009 2010 2011

Investment in Real Estate

Total Fixed Asset Investment

RMBmillion

Key Industries/Sectors

Pillar industries continue to dominateTianjin has followed a high-investment and high-output growth model

over the past few years, as it strives to develop into Northern Chinas

largest industrial centre. The pillar industries in the citys economy

include equipment manufacturing, petrochemicals, electronic

information, and light manufacturing and textile industry, which

together account for 90% of gross output; equipment manufacturing

alone contributes 41%. Evidence of the strength of Tianjins key

industries is clear through the established presence of names such

as Airbus, Bohai Drilling, Bohai Equipment and Vestas; and also in

newcomers like John Deere, Joy Mining Machinery and the blade

project of Dongfang Electric (Tianjin) Wind Power Technology.

Pillar industries in Tianjin 2011

Source: Tianjin Municipal Statistic Bureau, 2012

SectorGross Output Value of Industry

(Billions RMB)%

Total 2,109 100

Equipment

Manufacturing873 41

Petrochemical 394 19

Electronic Information 329 15

Light Manufacturing andTextile

310 15

New Energy and NewMaterial

102 5

Biomedical 76 4

Aerospace 25 1

Real estate sector: Investment in xed assets in urban areas

Real Estate 2007 2008 2009 2010 2011

Value

(RMB100 millions)505.3 653.7 735.2 866.6 1,080.0

y-o-y increase 25.6% 29.4% 12.5% 17.9% 24.6%

National Ranking 2nd 2nd 2nd 2nd 2nd

Total xed assetinvestment

(RMB millions)

2,227.7 3,189.5 4,700.3 6,114.3 7,057.2


15/24


Source: Ministry of Education, 2012

Education

A major academic hub

Tianjin is one of Chinas major academic hubs; according to the

2012 Tianjin Statistical Yearbook, the city is home to 55 higher

education institutions and has a total enrolment of nearly 450,000

students. Comprising a mixture of general universities and several

specialising in science and engineering, Tianjins higher education

system is comprehensive and covers every major discipline, and its

highest prole colleges include Nankai University, Tianjin University,

Tianjin Medical University and Tianjin University of Finance and

Economics. Furthermore, the city also has 139 scientic research

and technological development institutes, which engage over 13,000

professionals. The National Sixth Population Census reported that

17.5% of Tianjins population had received a higher education.

The citys latest Five-Year Plan for education is primarily concerned

with the deepening of research and development skills, and besides

comprehensively strengthening the quality of higher education,

Number of Universities

a greater emphasis on vocational universities and professional

institutions will be central to advancing this objective.

Tianjin Haihe Education Park: positioned as a state-level

exhibition of vocational education reform and innovation, the

park covers an area of 37 sq km located on the south bank of

the Haihe River between downtown Tianjin and Binhai New

Area, and consists of three parts: Higher Vocational Colleges

Park, Higher Education Park and High and New Technology

Research Park. Construction commenced in 2009 and

seven vocational colleges have now been completed, with

more planned, including new campuses from the two most

renowned universities in the city Nankai University and Tianjin

University.

Source: Tianjin Statistical Yearbook

Tianjin Higher Education Indicators (2011)

Higher Education Institutions 55

Graduates 108,723

Enrolment 449,702

0 20 40 60 80 100

Jinan

Shenyang

Zhengzhou

Chengdu

ChangshaChongqing

Tianjin

Nanjing

Shanghai

Xi'an

Wuhan

Guangzhou

Beijing


16/24


Major Employers

Tianjin FAW Toyota Motor Co.,Ltd

Established in 2000, TFTM is located in Tianjin Economic and

Development Area (TEDA) with a total area of 1.55 million sq m. It is

a joint venture company funded by China FAW Group, Tianjin FAW

XIALI Automobile Co., Ltd, Toyota Motor Corp and Toyota Motor

(China) Investment Co., Ltd. In 2011, TFTM completed production of

500,000 vehicles with a revenue of RMB 67.1 billion.

TEDA Investment Holding

TEDA Investment Holding was founded in 1984, along the

establishment of Tianjin Economic Development Area. As one of

the largest SOEs in Tianjin, TEDA Holding is a forerunner in various

business elds, including level one area development and real estate,

public facilities, manufacturing, nance and services. In 2011, its sales

revenue was RMB 58.3 billion and its total assets were valued at RMB

180.7 billion.

Samsung

Located in Tianjin Xiqing District Microelectronics Industrial Park,

Tianjin Samsung Communication Technology was established in 2001.

It was jointly founded by Samsung Electronics and Tianjin ElectronicInstrument Corporation and its core businesses focusing on the

manufacture and sale of GSM smart phones. The company is a major

engine of economic activity and annually is now producing more than

RMB 200 billion in revenue and indirectly generates approximately

150,000 jobs.

Airbus

Tianjin Airbus assembly line is the rst outside of Europe. Located

in the Tianjin Free Trade Zone, the assembly line, with a planned

production capacity to assemble 300 A320 planes by 2015, ofcially

opened in 2008. In 2009, Airbus also signed a Memorandum of

Understanding with Tianjin Free Trade Zone to establish a logistics

centre that will optimise its supply chain management for all of Airbus

vendors and clients in China. Airbus currently employs more than 400

employees in Tianjin, of which more than 95% are local.

United Technology Corporation - Otis

Otis, a United Technologies Corporate (UTC) subsidiary and the

world's leading manufacturer, installer and maintainer of elevators,

escalators and moving walkways set up its rst joint venture company

in 1984. In 2007, a 140,000-sq m Otis TEDA Manufacturing Base

was constructed in TEDA. As the Asia-Pacic manufacturing centre

of elevator and components, product R&D centre and industry chain

building centre, the current Otis TEDA Base has become the most

advanced elevator manufacturing base and the rst global Green-

power pilot factory.

Tinghsin

Tinghsin International Group is a Taiwan funded enterprise which

expanded aggressively in mainland China. It was founded in Tianjin

TEDA in 1991 with total investment in Tianjin reaching above RMB

5 billion. Tinghsin Group has many sub-brands including Tingyi, HY

Mall, Dicos and Family Mart. They attained revenue of RMB 6.8 billion

in 2010. Now, the group has 14 factories, four shopping malls and 50

restaurants in Tianjin with a 5,550 strong work force.

COSCO

China COSCO Holdings Company Limited was established in Tianjin

Port Free Trade Zone in 2005, and is listed on the stock exchange

in HKSE and SSE. It is the listed agship and integrating platform for

COSCO Group, the second largest integrated shipping company in

the world. The company is located 16 km away from the Tianjin Port

and has a campus of 200,000 sq m. Its core businesses are shipping,

logistics, terminal and related business and container leasing business.

Bohai Bank

Established in 2005 and located in Hexi District, Bohai Bank has made

a signicant mark in the nance sector. Their achievements include

being the rst national joint-stock commercial bank approved by the

State Council, the rst Chinese commercial bank that brought in a

foreign strategic investor at the initiation and establishment phase, and

also the rst national joint-stock commercial bank headquartered in

Tianjin. Bohai Banks total assets are estimated to be approximately

RMB 300 billion.



17/24


Financial Street acquires land in Tianjin

Financial Street (Tianjin), a subsidiary of Beijing Financial Street

Holdings Co., Ltd., has acquired a mixed-use plot located on the

south side of Changjiang Road in Tianjins Nankai district. The

purchase price of RMB 2.36 billion for the 79,600 sq m site was

the second highest achieved in Tianjin in 2011. The site has a

planned above-ground GFA of 295,000 sq m and will include

residential, retail, ofce and hotel space.

Unilever to build production base in Tianjin

Unilever plc, the worlds leading consumer product supplier, is

building one of its largest production bases in Tianjin. The facility,

located in Tianjin Airport Economic Zone, will cover a site area of

800 acres. Phase one of the project, incorporating 400 acres and

a total investment of US$100 million, started construction in 2011.

The base will increase its capacity continuously while producing

items such as washing-up liquid and toothpaste for the Chinese

market and for exports to nearby Asian markets.

E-Commerce gathering strength in Tianjin

Taking advantage of its skilled workers, recent high-tech

developments and its strategic location near Beijing, Tianjin

has become the preferential location for e-commerce operators.Adding to the current pool of globally recognised e-commerce

companies, such as Alibaba and Amazon, other e-commerce

companies have either relocated to the city or have plans to

do so; these include Sohu Video, OkayBuy and Dangdang.

Sohu Video recently invested US$20 million in the construction

of its Northern China headquarters in the Tianjin Economic-

Technological Development Area of TBNA, and OkayBuy has

selected Sino-Singapore Tianjin Eco-City for its back ofce

operation. Meanwhile, Dangdang has

invested RMB 400 million in setting

up its Northern China headquarters

in Wuqing District. The arrival of

these e-commerce businesses will

play a large part in Tianjins ongoing

economic growth, at the same time

strengthening demand within the

property market.

Recent Major Investments

Third Hotel Indigo in China opened in Tianjin

InterContinental Hotels Group introduced its Hotel Indigo brand to

the Xiaobailou Commercial Business District in September 2012.

The boutique hotel, occupying some 30,000 sq m, is located in the

Old German Concession and is the international operators third

Hotel Indigo in China.

IKEAs Tianjin store

IKEA, the Swedish home-furnishings group, has opened its Tianjin

store (their tenth in China) in Dongli District. The suburban location

is situated between Central Tianjin and Tianjin Binhai New Area,next to a light rail line and close to several major highways. The

46,000 sq m store includes showrooms, restaurants and the largest

IKEA childrens playground in China.

GE to set up Medical Equipment Project in Tianjin Port

US-based GE, one of worlds largest electrical and electronic

manufacturing companies, recently announced plans to build a

large-scale medical equipment manufacturing facility in the Tianjin

Port Free Trade Zone. With a total investment of US$70 million,

the projects rst phase will focus on producing high-end precisionmedical equipment. Once complete, it is anticipated that the facility

will be one of GEs largest production bases anywhere in the world.

The Free Trade Zone has attracted 21 projects from Fortune Global

500 companies, and from existing companies in the area including

Mitsubishi, Samsung, Carrefour and Ford.

Archer Daniels Midland Company (ADM) plans Grain and Oil

Base in Tianjin

ADM, a US-based Fortune 500 company, has announced a

cooperation agreement with the Binhai New Area Economic Port

Zone that will lead to the development of a food-focused logistics

and processing plant responsible for grade sugar syrup production,

our milling and edible cellulose production. The projects rst phase

will cover a site area of 490,000 sq m, which will be signicantly

larger than COFCOs plant in Tianjin, ADMs main competitor. The

project began construction in 2012 with an allocated investment

of US$300 million. ADMs presence in Tianjin is expected to help

create further opportunities for future cooperation in related elds

within the food industry chain.


18/24

Key Players

Investors

Ofce Local developers Ningfa, Tianfang Group, Tifen,Wanshun

Domestic

developers

Beijing Financial Street, CITIC,COFCO, Forte, R&F Properties

Foreign developers CapitaLand, GIC, HutchisonWhampoa, Kerry Properties, TishmanSpeyer

Retail Local developers Modern Group, Quanyechang,Wanlon, Yishang Group

Domestic

developers

CITIC, COFCO, Hisense, Pengxin,Tee Mall, Wanda

Foreign developers CapitaLand, GIC, Hang Lung, Isetan

RDM, SM GroupResidential Local developers Hongze, Ningfa, Sunac, Tianfang

Group, Wanshun

Domestic

developers

Vanke, Beijing Financial Street , R&FProperties, China Merchants, Poly,China Resources Land, Beijing CapitalLand, Sino -ocean Land, Vantone,Gemdale

Foreign developers Hutchison Whampoa, Keppel Land,Kerry Properties, Sunway, Wharf,Yanlord

Industrial Local developers TEDA T&B holding

Domesticdevelopers Haier, Liando, ZTE

Foreign developers GLP, Goodman, Mapletree

Occupiers

Ofce Logistics and Shipping COSCO, K Line, Kuehne-Nagel,Maersk

Finance BNP, Deutsche Bank, JP Morgan,Samsung Property Insurance

Services Firms Deloitte, Jones Lang LaSalle, PwC,The Executive Centre

Real Estate Hutchison Whampoa, Sohu,Tishman Speyer

Retail Marts/CVA Carrefour, E-mart, Walmart,7-Eleven

Department Store Far Eastern, Isetan, Lotte, Parkson,Robbinz, Vans

Shopping Mall Aqua City, AEON, Hisense Plaza,Joy City

Industrial Food and Beverage COFCO, Nestle, Pepsi, Tinghsin,Yakult

Electronic Freescale IBM, LG, Motorola,Samsung

Daily Consumer Goods P&G, Unilever, UnicharmAuto Toyota, Volkswagen,Biomedical GSK, Novo NordiskPetrochemical Industry CNOOC, PetroChina, ShellNew Energy Gamesa, Vestas

Aviation industry Airbus, Air China, Boeing, Goodrich

Real Estate Dashboard

Market Size

Ofces Grade A (sq m) 308,000

Retail (sq m) 2,430,000

High-end Residential (units) 33,000

Market Activity

Ofce Vacancy Grade A (%) 25.0%

Retail Vacancy (%) 4.0%

Benchmark Values

Ofces Grade A Rents* (RMB/sq m/month) 150

Retail Sales Turnover (RMB/sq m/month) 2,200

High-end Residential Prices (RMB/sq m) 21,000

Note: Data as at 2012 Q4

* Grade A ofce rents refer to gross rent GFA including PM feeSource: Jones Lang LaSalle

Key Transactions

Investors

Bank of

Communications

Bank of Communications bought 35,000-sqm ofcespace and 10,000-sqm retail podium of Xinyinbuilding in Q2 2010.

Beijing FinancialStreet

Beijing Financial Street bought a 79,600-sqm mixed-use plot in central Tianjin in Q3 2011, at a price ofRMB 2.36 billion.

Poly and Sunac Poly Real Estate and a local Tianjin developer,Sunac Holdings acquired an 117,000-sqm plot indowntown Tianjin for RMB 2.99 billion in Q3 2011.

Beijing Bank Beijing Bank purchased the 21,000-sq m Block Cofce tower of Tianjin Metropolis in Q4 2011.

Preferred Freezer

Services

Preferred Freezer Services acquired a 40,000-sqm plot in Tianjin port to establish refrigeratedwarehouse in Q4 2011.

Parkson Parkson purchased a 45,000-sqm retail property enbloc for RMB 700 million in Q4 2011

Alibaba Group In Q2 2012, Alibaba Group announced plans to buildan e-commerce logistics centre in Tianjin WuqingDistrict, with a total investment of RMB 3 billion and aland area of 1,000,000 sq m.

Occupiers

PwC PwC leased 1,500 sq m in the Exchange Tower 2 inQ2 2011

JP Morgan JP. Morgan relocated to Tianjin World FinancialCentre and leased 700 sq m in Q2 2011

Forte Group Forte leased 1,500 sq m in Xinyin Building in Q32011

Huawei Huawei rented 1,850 sq m in Tianjin World Financial

Centre in Q4 2011 for relocationState Bank of

India (SBI)

SBI leased 550 sq m in Tianjin World FinancialCenter in Q3 2012 to open a branch in the city


Real Estate Overview


19/24

Logistics

As one of the main logistics hubs in Northern China, the central

government hopes to develop Tianjin, and more specically the

TBNA, into an international logistics centre, taking advantage

of its geographic location along the coast and also riding the

wave of recent interest from international logistics developers

such as Gazeley and Mapletree. In order to improve the citys

logistics base, considerable policy and scal support have been

injected, with the government boosting its investment in Tianjins

infrastructure, including improvements to its port, airport, railwaysand an various expressways. It is also offering preferential

policies - Dongjiang Free Trade Port Zone, for example, offers

tax-free incentives and an efcient customs clearance capability.

Residential

Before 2004, local developers were the main players in the citys

residential market. Since then, however, the residential market

has become more diversied in terms of developers background,

product types and development areas. Most high-end residentialproperties are situated within the four major submarkets of

Central Tianjin: namely Heping District, Meijiang area in Hexi

District, the Old Town Area and the Olympic Center in Nankai

District. Along with increased unit availability, sales volumes

within the residential sector have increased. Local residents who

are purchasing properties mainly for their own occupation or

upgrades are still the main contributors to demand.

Ofces

The dominant sectors driving absorption in the Tianjin ofce

market are nancial, professional services, trading, manufacturing,

and shipping and logistics companies, with average space leased

in the region of 400-700 sq m. Grade A ofce properties are mainly

occupied by leading MNCs and well-known domestic companies,

while domestic SMEs, attracted by lower rents, are mostly

clustered in Grade B buildings. Due to a lack of available space

and deteriorating qualities in their existing buildings, an increasing

number of companies are preferring to select new and better-quality ofce buildings for expansions and upgrades. Upgrades are

becoming a major force behind Tianjins ofce leasing activities.

Retail

Retail development in Tianjin has historically tted into

three categories: department stores in traditional shopping

destinations, hypermarket-anchored community centres and

street-front shops. Until recently, domestic brands, particularlyapparel brands, have dominated the retail scene. However, over

the last few years, in tandem with the opening of new shopping

centres, international retail developers and brands, eyeing

strong retail sales growth, have sped up their expansion into the

city. The shopping mall is now the retail category in the city,

accounting for roughly 87% of retail property completions (GFA)

by 2012, and is expected to heavily inuence the retail sector

over the next ve years.


Jones Lang LaSalles View


20/24


Logistics

Continues to benet from Tianjins manufacturing base

It was not until 2007 that Tianjins logistics market started to witness

any notable increase in new supply, boosted by the arrival of a

number of international logistics developers including Gazeley, GLP

and Mapletree, and their involvement in some signicant projects.

These and other international players have not only brought higher

construction standards, but also new and more comprehensive

logistics services; furthermore, the healthy competition among

developers and 3PLs is encouraging an improvement in market

transparency and accelerating the maturity of Tianjins logistics

market.

Compared with cities like Shanghai and Beijing, Tianjins good

transportation infrastructure, its accessibility to other major cities

and, most importantly, its lower industrial land and operation costs,

are key factors contributing to the citys attraction for logistics

developers.

Logistics demand in Tianjin is being generated from companies

serving the major manufacturers in industries like petrochemicals,

electronics and automotive, and also from retail related players.

In particular, e-commerce enterprises, especially B2C or online

shopping, are hitting record sales levels in China, and as with other

cities are generating strong demand for the logistics sector in Tianjin.

Overall, low vacancy rates and increasing demand for non-

bonded space continues to boost the growth of non-bonded rental

property which has outperformed that for bonded projects. Several

well-known international logistics developers and investors are

continuing to seek opportunities to acquire land for new logistics

facilities, and although they are primarily focused on Tianjins core

economic development areas such as TEDA, Xiqing District andthe airport area, increasing land scarcity and difculties negotiating

with governments, now mean that they are extending their search

across the region. After several months of negotiation with local

governments, a few agreements were nally settled in 2012, and

these new non-bonded projects will ease the t ight supply situation

over the next several years.

Ofces

Domestic rms are the main driver for ofce space demandThe Tianjin ofce market has grown in size and geographic reach over

the past ve years, albeit from a low base. Within the central city, its

four major ofce submarkets - Nanjing Road, Xiaobailou, Youyi Road

and Haihe Riverside - are home to the prime ofce buildings and key

MNC and domestic tenants.

Nanjing Road continues to be the primary and best-performing

Grade A ofce submarket due to its central location, mature

environment and convenient access to various transport modes.

Xiaobailou, an older submarket of Grade B ofce buildings, is

mostly occupied by domestic trading, real estate, and shipping

and logistics companies.

The Youyi Road submarket is mainly occupied by domestic

nancial companies.

Haihe Riverside is an emerging ofce submarket, particularly

with the opening of the TWFC (Tianjin World Financial Centre).

It is projected to see further signicant real estate activity in the

next few years, particularly with a large portion of the citys future

projects through to 2015 being concentrated in this area, due to

active government promotion.

Submarket Nanjing Road Xiaobailou Youyi Road HaiheRiverside

Key Features Tianjins CBD An oldersubmarket,seeingadditional

new

development

Financial-focused

submarket

An emergingofcesubmarket

Key Occupiers Multinationalnancial andprofessional

services

companies

Domestictrading andshipping& logisticscompanies

as well as

real estate

enterprises

Domesticnancial andreal estate

companies,near to city

governmentofces

Financial,professional

services,and shipping& logisticscompanies

Asset

Characteristics

Primary

Grade

A ofcesubmarket,direct subway

connections

Grade B

ofcesGrade B

ofcesFuture

Grade Aofcesupply

clustered

here


21/24


The completion of TWFC has added 205,000 sq m of ofce space

to the market, effectively tripling the volume that had existed over

the past three years to a total Grade A ofce stock that now exceeds

300,000 sq m. TWFC has therefore provided much needed space

for tenants who, previously, had little space to expand.

Overall, domestic rms are providing the strongest leasing demand

in the Tianjin market, while MNC and domestic nancial institutions

and professional services rms have driven demand for Grade A

ofce space as they seek to open branch ofces in Tianjin as the city

expands as a nancial centre for Northern China. Likewise, as the

city develops as a logistics hub, shipping and logistics rms along

with trading companies have also provided a steady demand forofce space. Most companies preferences are for new buildings to

meet their expansion and upgrade requirements.

With the arrival of high specication projects, and given high

occupancy rates in existing projects, average ofce rents grew by

4.4% in 2012 to stand at RMB 127 per sq m per month. Future

rental growth will depend upon how tenants perceive the quality and

location of new projects. There is currently a lack of wholly-owned

and well-managed ofces to choose from, and most buildings are

sold as strata-title thus restricting the type of space sought byMNCs.

A mixed outlook for 2013-2015

Over the next few years, Central Tianjins ofce stock will

substantially grow in size, but most buildings will be sold strata-title,

as many developers either need funds or lack condence in the

market. The Tianjin Binhai New Area will potentially add a large

amount of new space; however, most observers dont expect this

supply to impact Central Tianjins market. If the economy, and

especially the service sector, continues to grow strongly, there could

be a signicant increase in demand for ofce space, helping to boost

rental growth, despite large amounts of space being completed

both in the city and the TBNA. The nal outcome is less than clear

and will depend both on how developers approach the market and

the level to which occupiers are concerned with the ownership and

operational structure of new buildings.


22/24

Note: Data as at 2012 Q4

Source: Jones Lang LaSalle


purchasers. The focus of these measures was to prevent residential

prices from rebounding. So far they have been effective, with prices

increases and overall sales activity being relatively muted.

Looking forward, Tianjin is one of the fastest expanding cities in China

in terms of its population growth, and given this and an anticipated

strong local demand from residents for purchasing units for their own

use, we believe that the outlook for Tianjin residential market remains

one of stability, with an upward trend over the longer term.

Retail

New completions bring a more sophisticated shoppingenvironment

Prime-quality retail projects are currently distributed in six submarkets

of Central Tianjin: Binjiang Avenue and Heping Road (pedestrianised

streets), Nanjing Road, Xiaobailou, Youyi Road and Old Town Area.

While Nanjing Road and the pedestrianised streets are still considered

to be the premier retail precincts (with the highest footfall), the Old

Town area, with three new shopping centres opened in 2011 and an

upcoming Parksons Department Store (totalling 275,000 sq m), is

quickly emerging as a major retail submarket as it attracts a greater

share of retail trafc.

International developers and operators such as Lotte Group from

Korea, SM Supermalls from the Philippines, and Hang Lung and

Hutchison Whampoa from Hong Kong, have all entered the Tianjin

retail market, introducing a number of large-scale shopping centres

that feature imaginative designs and layouts. As a result, shopping

centres with a more comprehensive retailer mix are beginning to make

up a larger proportion of the market, compared to older traditional

department stores that, for example, provide limited food and

beverage facilities.

Since 2007, international retailers such as, Zara, H&M, C&A, Louis

Vuitton, Chaumet, Salvatore Ferragamo and Bottega Veneta, have

been drawn by Tianjins strong spending power and growth potential,

and have made their debuts in different projects in the city; this has

elevated pre-commitment rates in most of the new retail malls.

The markets incumbent players are now shifting their focus into

enhancing the shopper experience and, as a consequence, Tianjins

retail offer is beginning to catch up with its economic development

trajectory.

Residential

Greater product diversication

The 1990s saw relatively few high-end residential projects emerge in

Central Tianjin, but, since 2004, the residential market has boomed

in terms of construction and price growth. After several years of rapid

development, the market has evolved and matured; once dominated

by local players, its composition is gradually changing as more large

domestic and foreign developers launch projects, such as Poly, Kerry,

Hutchison Whampoa and Yanlord.

Supply

High-end residential stock (units) 33,000

Demand

High-end residential sales rate 64.0%

Asset Performance

High-end residential capital values (RMB/sq m) 21,000

Greater product diversication is also emerging as many of these

larger developers begin to bring various types and sizes of units to

the market. For example, Hutchison Whampoa has launched thedevelopment of three high-rise residential towers in their mixed-use

project, Metropolitan Heights, along Nanjing Road. The project aims to

differentiate itself with several rooftop villas and a large outdoor green

space on top of its retail podium. Tianjin Metropolis, developed jointly

by Beijing Financial Street and Poly Real Estate, is another example,

introducing a 646 sq m t-out unit per oor to the market; given the

large average size of each, they remain, to date, the largest residential

units for sale in the citys high-end residential market.

Although Tianjins residential market has seen rapid growth since

2004, demand has kept pace with supply, indicating the strong

market acceptance of high-prole residential projects. Local residents

purchasing residential properties mainly for their own-occupation

or for upgrading will still be the predominant driver of demand. The

steady demand for owner-occupation indicates that Tianjins high-end

residential property market is healthy yet not overheated.

With a sharp increase in capital values for the citys residential

properties during 2009-2010, the local government in tandem with

the central government started to issue tightening measures from

Q1 2011 to control sales prices. Under the new regulations, tightercontrol was enforced on purchasing rights and nancing options for


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Contacts:

Contacts:

Rosemary Feenan

Director of Global Research Programmes

Jones Lang LaSalle

+44 20 3147 1198

[email protected]

Jeremy Kelly

Global Research Programmes

Jones Lang LaSalle

+44 20 3147 1199

[email protected]

Jones Lang LaSalle is the number one real estate research provider

in Asia Pacic. A team of 100+ researchers are committed to

providing best-in-class market knowledge that enables clients to

optimise real estate strategies and mitigate risks. Our award-winning

research includes the agship Asia Pacic Property Digest (APPD)

and industry-leading Real Estate Intelligence Service (REIS).

www.ap.joneslanglasalle.com/researchhub

Jones Lang LaSalles World Winning Cities programme is a

multi-year research initiative designed to draw together the essence

of contemporary city competitiveness and to predict the future city

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trends that will impact on the business and economic landscape and

how they are coalescing to create the rising urban stars of the next

decade. It is unique in assessing the contribution of real estate to

sustainable competitive advantage and the implications for investors,developers, corporate occupiers and city governments. World

Winning Cities Research goes beyond description to uncover the

why of city real estate market dynamics.

www.joneslanglasalle.com/worldwinningcities

www.joneslanglasalle.com/China50cities

Jones Lang LaSalle Research Asia Pacic

Michael Hart

Managing Director of Tianjin

+86 22 8319 2233

[email protected]

Dr Jane Murray

Head of Research

Jones Lang LaSalle, Asia Pacic+852 2846 5274

[email protected]

Michael Klibaner

Head of Research

Jones Lang LaSalle, Greater China

+852 2846 5276

[email protected]

Stefanie Zou

Strategic Consulting, Tianjin

+86 22 8319 2233

[email protected]

World Winning Cities



24/24

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Thi bli ti i th l t f J L L S ll IP I d t t b i d d d t itt d i f b ith i h l i t ith t th i itt

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WWC TianjinCityProfile Nov13 Eng

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