By Zheng Lifei (China Daily)
Updated: 2007-08-20 06:50

SHANGHAI: The property market in the city is expected to remain buoyant in the second half of the year, driven by growing numbers of retailers, corporate office rentals and demand from the manufacturing and logistics industries, analysts say.

The commercial real estate sector, fueled by an economy that grew by 13 percent in the first half, continued its momentum from last year and is likely to sustain the pace in the second half.

Retail market

Strong retail sales and the arrival of more foreign retailers in the city will continue to propel the retail property market in Shanghai, analysts note.

Total property revenues in the city reached 188.7 billion yuan (US$24.83 billion) in the first half of this year, up 14.2 percent year-on-year, the fastest pace in a decade, according to figures released by the municipal statistics bureau.

Foreign capital has been expanding in the retail industry as the market further opens and domestic consumption continues to accelerate.

Contractual foreign direct investment (FDI) in both wholesale and retail industries in Shanghai totaled $1.711 billion in 2006, accounting for 11.7 percent of the total FDI in the he city, up 3 percent year-on-year.

International retailers of all types, from fashion, food and beverage operations to big-box hypermarkets, continued to flock to Shanghai, the most cosmopolitan city in China, driving up average ground floor rentals to $120.60 per sq m a month in the first half of the year, a 8.8 percent year-on-year increase, according to Colliers International, a global real estate consultancy.

Total foreign-funded retail property purchases reached almost 8.8 billion yuan in the first quarter of the year, growing 15.4 percent year-on-year and accounting for 9.4 percent of all retail property purchases, according to official figures.

"The future development of high-end retail properties (in Shanghai) will be driven by the robust growth of foreign retail businesses," Colliers International says in a research note.

It is a view shared by other property analysts.

"Inquiries from European retailers alone have risen by more than 50 percent over the previous quarter and more are expected to enter Shanghai later this year," says Kenny Ho, research head for global real estate services firm Jones Lang LaSalle, Shanghai.

"Their entry will definitely fuel the demand for retail space," Ho says.

   1 2   

   1 2