Real estate boom brings big names

QINGDAO: The Olympic Games will make Qingdao an internationally known sailing center, but it is already also well known to property developers as a locale offering big opportunities .

"Qingdao's real estate entered a new period of rapid development over the past five years, and now it is moving in a new direction of bigger projects and name brands," said Zhang Jun, deputy director of Qingdao Construction Committee.

The real estate industry is already a mainstay of the city's economy. Since 2005 developers have invested more than 90 billion yuan in the sector, which registered an average annual growth rate surpassing 20 percent.

During the 11th Five-Year Plan period (2006-10), investment in real estate development is expected to reach 140 billion yuan, with an average annual growth rate of 15 percent.

Investment in housing development is projected to reach 110 billion yuan over the period, an average annual growth rate of 14 percent.

Floor space of completed commercial buildings is expected to total 45 million sq m, with an average annual growth rate of 10 percent. Commercial residential buildings will have a combined floor space of 36 million sq m, after an average annual growth rate of 9 percent, Zhang said.

During the 11th Five-Year Plan period, the housing supply is expected to further improve with more medium-sized and small apartments of less than 120 sq m built, accounting for 80 percent of the total, Zhang added.

Housing costs in Qingdao are among the most rapidly rising in the nation. Urban home prices have increased from 2,144 yuan per sq m in 2002 to the current 6,288 yuan per sq m.

The real estate sector has matured since the early 1990s when the municipal government adopted favorable development policies. Three hundred real estate corporations were registered by 1992, with total investment increasing to 800 million yuan compared to 100 million yuan the year previous.

Fifteen years later, annual investment reached 20 billion yuan. A group of local real estate corporations have become nationally famous, including Hisense Real Estate and Qingdao Construction Group, with the combined revenue of the 10 largest developers surpassing 1 billion yuan in 2007.

"The annual area developed by Qingdao Construction was over 1 million sq m for the past two years. There is still broader space for development of real estate in Qingdao and we are confident in it," said Du Bo, chairman of the board of Qingdao Construction Group.

Housing mix

Real estate development has also improved the overall housing mix, with commercial property, affordable housing and low-rent apartments complementing each other to improve the living conditions of many.

More than 20 large real estate corporations have entered the Qingdao market since 2005, including well-known brands Vanke and Hutchison Whampoa Property.

By the end of 2020, the annual number of newly built apartments is projected to be more than 110,000 units, with new floor space totaling over 10 million sq m.

(China Daily 03/20/2008 page24)