Lujiazui still on the rise
By Tian Xiuzhen
LUJIAZUI Finance and Trade Zone, the vibrant central business district (CBD) area in the Pudong District, is rapidly building itself into a world-class business district, driving up the real estate market in the area.
Jones Lang LaSalle, a leading global real estate services firm, recently said the market would probably reach a peak in 2007 and 2008. The company pointed to two major factors driving up the demand for local real estate: offshoring and the growth of the financial sector in Pudong.
In 2004, the agency sourced and secured over 20,000 square metres of office space in Lujiazui, out of an area covering 1.7 square kilometres where a number of leading corporations have headquarters or regional offices.
"The improved infrastructure and established business environment in Lujiazui have inevitably attracted many company headquarters on the heels of banks and insurance companies," said Remy Chan, commercial head of Jones Lang LaSalle Shanghai. "Lujiazui is set to compete in the international arena," he added.
Lujiazui has seen rapid development since its inception in 1993. By 2002, 121 financial organizations had entered the zone, including 56 foreign financial organizations and 43 foreign banks.
An aggressive level of expansion in China by foreign financial institutions, resulting from the opening of the financial sector subsequent to the end of the Chinese Government's 10th Five- Year Plan (2001-05), will unleash another scramble for office space - viewed by many experts as a strong reinforcement to property prices.
Shanghai's present area taken up by international financial corporations comes to around 160,000 square metres, compared to a million square metres in Hong Kong's financial district.
"We are sure that this discrepancy will be substantially reduced in the coming years as soaring demand for offices by multinationals continues," said Chan.
Despite several major construction projects under way, including the 337,000-square-metre World Finance Centre, expected to be finished by 2007, and the new 220,000-square- metre Sun Hung Kai Project due for completion by 2008, rents in Lujiazui will remain strong, Chan said, due to persistent demand.
However, the overwhelming optimism about the future of Pudong's commercial market should not lead to certain drawbacks being overlooked.
Chan pointed to the relatively underdeveloped river-crossing transportation infrastructure and the relative isolation of the buildings in Lujiazui as bottlenecks that needed to be broken. "Other particular concerns are commercial facilities and the overall environment," Chan added.
He suggested that the creation of a more integrated infrastructure could help to address the above concerns, which the government of Pudong New Area has already taken into careful consideration.