Quake won't affect Chengdu real estate, expert says Go back »

2008-06-27 | Southwest China

Quake won't affect Chengdu real estate, expert says

Chengdu’s property market can expect a slight slip in the wake of the 12th May earthquake but should not be affected long term, a real-estate expert has said.

“I am optimistic in the long run,” said Eddie W. S. Ng, head of markets for the Chengdu branch of international real-estate firm Jones Lang LaSalle. “In three to five months people will still think Chengdu is a beautiful city, a livable city.”

Mr. Ng made the comments on 25th June in a speech at the Shangri-La Hotel organised by the Chengdu chapter of the European Union Chamber of Commerce in China.

According to data from Jones Lang LaSalle, residential sector demand dropped 23.4 percent in May compared to the previous month and almost 64 percent of potential buyers said they would postpone plans to buy.

However, prices remained stable at about 5,500 yuan per square meter and Mr. Ng said the demand drop would not last long.

“Once people realize the buildings in Chengdu are safe, they will return,” he said.
Ng said the office market would also remain largely unaffected and although according to Jones Lang LaSalle interviews some potential entrants to Chengdu would delay, those who have already decided to enter would not defer plans.

One expected change is an increase in demand for building quality guarantees from homebuyers and companies newly fearful of shoddy construction.

“In new marketing campaigns, developers will focus more on build quality,” said Ng while predicting developers of grade-A offices would benefit from firms looking to upgrade.

However, he said a recent upswing in demand for lower-level housing and office space would not last long, citing the experience of the American real-estate market after 9/11 when decreased demand for tower-block offices returned to normal a few years after the attacks.

He also said that space limitations in Chengdu meant tall buildings were essential.
“The reality is we need to build more high rises,” Ng said.

In retail, Ng said a 50 to 60 percent drop in revenue had hit department stores in May as consumers stayed home and bought only essentials such as food and water.

However, he said a revival was already underway and between May 31 and June 2 stores including Wangfujing and Pacific recorded a 20 to 25 percent increase in sales over the same period last year.

The Sichuan tourist industry is expected to lose 60 billion yuan in revenue, Ng said, equal to half the province’s annual revenue intake in 2007.

Ng said the restructuring of the tourism industry would rely heavily on government planning and investment.

The outlook for developers and investors in Chengdu remained largely unchanged, Ng said.
Ng was introduced by Chair of the Chengdu EUCCC Board Pascal Hermandesse.

To see the full presentation, please click here.

To view a photograph of the event, please click here.