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News Release

Shanghai

2010 World Expo Has Built Strong Foundations for Shanghai’s Future   

Jones Lang LaSalle releases latest white paper on the Expo’s short and long-term impact to key property sectors


Jones Lang LaSalle, the world’s leading real estate services firm, has released its latest white paper World Expo – Building the Foundations for Shanghai’s Future, which highlights how the 2010 Shanghai World Expo, the largest ever international event in China, will impact key property sectors. To reflect the theme of 'Better City, Better Life', Shanghai has spent over USD 95 billion on infrastructure improvements in preparation for the event. 'The real legacy of the Expo will come from the opportunities that the new infrastructure creates across Shanghai in all commercial and residential property sectors,' noted Anthony Couse, managing director for Jones Lang LaSalle in Shanghai. 'Indeed, the foundations for a new decade of growth and expansion for the city of Shanghai have been put in place.'

The scale and pace of infrastructure development in Shanghai over the past two years surpasses anything the world has ever seen – the upgrading of Pudong and Hongqiao airports, the expansion of the metro system and high-speed railway hubs, and the creation of a new cruise terminal are just some of the examples. All of these projects have made Shanghai a more integrated and accessible city, which will hugely benefit the property industry.

Among these, the build out of Shanghai’s metro system over the last five years will ultimately be the most important legacy of the Expo. In 2005, the city had only three metro lines and by 2008 a total of eight lines were operating. On the Expo’s opening day, 12 lines will be running with a total network length of 420 km. 'The expanded network will enable new, affordable homes located in the suburban areas to be connected with the traditional downtown core. The Metro network is also triggering more sophisticated forms of real estate development around the city’s new hubs – the Metro stations – where opportunities abound for future development,' added Couse.

In the office sector, higher accessibility will drive higher demand. This, in turn, will drive higher rents and capital values. The gains in efficiency and ease of doing business due to convenient transportation will boost the competitiveness of Shanghai against other cities in China. In addition, as areas outside the CBD become more accessible, the decentralised Grade A market is taking off in Shanghai.  Non-CBD locations are increasingly becoming convenient options for occupiers. 'The CBD will have strong competition in the next few years as the booming decentralised Grade A office market will offer highly competitive rental rates,' Couse noted.

The Expo’s impact on the retail sector will be more lasting than the six-month increase in tourism. Just like the office market, the expansion of the metro network is also opening up a vast decentralised shopping market. Increased foot traffic around new metro stations is creating opportunities for retail and mixed-use developments at these natural gathering points. In the outer areas of the city, metro stations are the preferred locations for community shopping centres. In addition, the Expo has accelerated the expansion plans of international brands seeking exposure to the expected 70 million, predominantly domestic, visitors. The brand recognitions that these retailers establish during the Expo period will make it easier for them to find acceptance once they expand into new cities in China.

After the Expo concludes, much of the vast site is expected to form the single largest downtown landbank for residential construction. Beyond the borders of the Expo site, residential development is already starting to flourish in the neighbouring riverfront areas. For the logistics sector, distribution centres serving the Greater Shanghai region will have a wider range of sites to choose from thanks to the expanded highway network.  For the hotel sector, the verdict of the Expo’s impact on the industry is still being speculated. However, with over 70 million expected visitors estimated by the Shanghai Tourism Bureau, hotels are likely to see a surge in demand generated by leisure, MICE, and business travellers. Economy products such as budget hotels will benefit largely from domestic leisure travellers.

The event will have a lasting effect on Shanghai’s overall economy and the property sector will be surely part of it. 'Investors and developers can look forward to tremendous opportunities in the city’s outlying areas – in office, retail, residential and logistics – which were previously not feasible.' As highlighted by Couse, 'The World Expo does not represent the end of Shanghai’s development; it merely lays the foundations for the city’s growth in the future.'