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News Release


Tianjin's Real Estate Market in 2008: Impact felt in Q4, reason for optimism about 2009 abundant

“The Tianjin property market was definitely affected by the global economic situation in Q3 and Q4, but there are reasons to be optimistic in 2009”, said Michael Hart, Managing Director of Jones Lang LaSalle Tianjin office. Transaction volume of high-end residential properties started increasing in the fourth quarter, after bottoming in 2008 Q3. It appears the Central government’s marco-controls and housing price reduction gradually started to work. Vacancy rates of bonded warehouses, particularly those in the port area, started to rise as a result in the slowdown of export and import volumes. While non-bonded ones are enjoying very high occupancy rates, thanks to the steady demand from local and domestic markets.  Demand for office and retail property was still evident, but more subdued than it had been in early 2008.


The major trend in the first three quarters of 2008 was an increasing level of new retailers coming to the market. During Q4, we saw landlords making tenant-mix adjustments in several major projects. For example, in October, Isetan introduced several new cosmetics, accessory and fashion brands across each floor of the building. Among them are first Folli Follie store in Tianjin, OBEG from England and BEAN POLE from Korea, etc. In December, Robbinz and New World Department Store also closed some floors for adjustment and renovation, which will further enhance these stores’ performance.

In addition, international tenants such DHC, Max Mara, and Paris Baguette which already have more than one store in Tianjin, continued their expansion within the city. Retail sales in Tianjin have enjoyed very strong growth in recent years, given the special economic condition of this year, retailers are generally making greater efforts with promotions and through publicity, to stimulate consumption and purchasing. Average rentals grew to RMB 500/sqm/month, an increase of 22% y-o-y.

During 4Q 2008, two new projects were completed in Hexi district—Landshare developed by the Datong Group and Jiamao Shopping Center developed by Singapore based CapitaLand. Both projects target middle class consumers and achieved occupancy rate higher than 70% upon their opening. By the end of 2008, total organized retail stock of Tianjin reached 1.47 million sqm. Moreover, as more large primary retail projects continue to be completed in next few years, this number is expected to nearly double by 2012.

Key Retail Transactions in 2008 Q4

GFA (sqm)
Folli Follie 
Hisense Plaza
Max Mara 
Hisense Plaza
Paris Baguette 

Grade A Office

In the midst of falling rentals and rising vacancy rates across major cities in China, effective rentals of Tianjin office market declined to RMB 127/sqm/month, from 143/sqm/month the previous quarter. Landlords have lowered their asking rentals, and are giving more incentives for existing clients to renew.

The fourth quarter brought mixed news to the office leasing market.  While some logistics and shipping companies either downsized or terminated their leases, a number of European banks continued to show their interest.  For example, Commerzbank leased 710 sqm in the Exchange Tower 2 and will open its first branch in Tianjin in the spring of 2009. At the same time, BNP began fit out work for their eventual relocation from the Tianjin International Building to the Exchange Tower 2, occupying a space of 634 sqm. Average vacancy rates in Grade A offices slightly declined to 16.5%, down 1.0% from the previous quarter.

No new major Grade A buildings are scheduled to complete in 2009. However, a large supply of Grade B projects will come onto the market potentially putting pressure on the existing Grade A properties.  Most of them are strata titled including Emperor Place, and Global Centre.

Key Office Transactions in 2008 Q4

GFA (sqm)
Tianjin International Building 
Fangshi Hengjin Investment 
New set up
The Exchange Tower 1
Nagase International Trading 
The Exchange Tower 1
Sun Life Everbright Life Insurance Co., Ltd. 
The Exchange Tower 2
The Exchange Tower 2
New set up


The financial crisis has impacted Tianjin’s import and export market, especially those in steel, electronics and automobiles. As a result, average vacancy rate of bonded properties rose 12.4% q-o-q.

However, local and domestic markets remained relatively robust, and most non-bonded properties are almost full with average non-bonded vacancy rates reaching a record low in 2008 Q4. Sankyu Logistics preleased 5,800 sqm in ProLogis Park Xiqing

Average rentals of the overall market fell to RMB 0.85/sqm/day, a decrease of 4.6% and 4.5% compared to previous quarter and year respectively.  Although a lot of bonded warehouse owners lowered their asking rentals to attract tenants, we noticed that asking rentals of non-bonded properties had posted a growth of 3.2% over last year.

“Despite the global slowdown, international developers are still positive about the long term outlook for the logistics market in Tianjin. A number of them are planning to acquire additional land or existing facilities”, noted Hart.

High-end Residential

In addition to series of incentives released by government, developers have further reduced asking prices and offered more mortgage incentives to stimulate housing purchase. In 2008 Q4, the Jones Lang LaSalle capital value of high-end residential market averaged  RMB 12,075/sqm, down 12% q-o-q. About one third of all the developers reduced price by RMB 1,500 - 3,000/sqm. On the back of the slumping residential market and mild leasing demand, most individual investors has lowered expectation on rental incomes. Effective rentals fell by 24% q-o-q, arrived at RMB 425/sqm/year.

After transactions reached bottom in Q3, units sold in Q4 increased significantly by 76%, reaching 1,129 units. Three projects in Nankai district contributed most of this quarter’s transactions, which are West Uptown Luxurious Apartment, Magnetic Capital, and R&F City Phase 3. All three projects are large scaled development, and have continued to achieve the highest transaction volume among all high-end projects for the past two years.

The increase in sales could have also been partially from a few new projects entering the market.  Two high-end projects launched presale in 2008 Q4 -- No.36 Xikang Road and Elite Residence. The first project has a total unit of 60, among which more than 2/3 are reported to have sold out already. Recently Vanke, who already has 12 residential projects in Central Tianjin and Binhai New Area, announced plans for another residential development in Tianjin. This new project, named Jinao International will have a total GFA of 160,000 sqm. We believe Tianjin will continue to play an important role in developer’s corporate strategy.


The majority of international investors were still holding off on new investment plans and being very cautious as the year ended. Besides the transactions of Tianjin City Tower and GKE Warehouse in earlier 2008, several other foreign investors have been using the time to research specific project, having narrowed their interests down to certain residential and retail properties.  We believe this could mean they will move quickly to purchase when the credit markets loosen in 2009.

Meanwhile, Tianjin government is increasing investment in infrastructure and modern service industry from various aspects. After the operation of Beijing- Tianjin high-speed railway began, the city turned their attention to a new high-speed inter-city railway between Tianjin and Baoding which will be built. The city is also focusing on the development of the Financial City in Heping district, as an important part of Haihe River red-development.  That project is expected to have a total investment of RMB 26 billion. Moreover, China Construction Bank (CCB) recently signed a strategic agreement with Binhai New Area (BNA), to provide RMB 180 billion to support infrastructure development, MSEs, other large projects, etc within next three years.


As we noted before, the impact of the financial crisis was certainly felt in Tianjin in late 2008, but we believe the economic fundamentals of the city’s emerging middle class will quickly remerge and support new retail locations and the long term prospects for the city means we’ll see international occupiers continue to expand in the city in 2009 and investors purchase assets in the city in increasing numbers.