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Tianjin

China’s City Winners: Tianjin City Profile

Thought-leading research from Jones Lang LaSalle: A Tier I economy on the cusp of becoming a Tier I real estate market


When we published our first World Winning Cities profile in 2006, Tianjin was a city with a strong but generic industrial base, a decent port and some tired real estate stock. Times have certainly changed, although international real estate investors have been slow to get the message.

Since 2007, the economy has more than doubled in size and the city is now home to what is arguably China’s largest aerospace manufacturing cluster. As the industrial base has continued to grow, other sectors such as tourism have taken off. Multiple five-star hotels dot the riverside, and Tianjin’s former Italian concession is now a popular pedestrian retail area. The rusting skeletons of half-completed office projects that used to dot the skyline have been replaced by iconic office towers and retail centres.
When a city of 13 million doubles the size of its modern residential and commercial stock all within just a few short years, it looks like a bubble from almost every angle. However, we have observed that when a city of this size retools, the overcapacity created in the short term can be absorbed in the mammoth cycles of take-up that would follow.

One of the most puzzling aspects of the current cycle is the lack of quality office space. The construction of office buildings is currently dominated by domestic developers who almost exclusively sell them in strata titles. As a result, the leading office towers have maintained occupancy rates in excess of 90%, and MNCs have few options for expansion.

Tianjin Binhai New Area (TBNA) is another example of a little understood and poorly marketed area that has not helped the city’s image. Central to Tianjin’s economy, but located on its eastern edge, the key industrial area has been widely panned for its attempt to create the Yujiapu Financial District. Some of the criticisms are well deserved. However, several projects with 20-year timelines look great only three years into the development cycle. No one expects Tianjin’s Yujiapu to rival Shanghai or Hong Kong, but a city of 13 million should be able to successfully create a district with a core financial component, provided the government first invests in the infrastructure, seeds it with state-owned enterprises (SOEs) and layers on financial incentives.

In recent years, the leaders of Tianjin have finally worked out how to leverage their industrial and population base. Some investors are positioning themselves to take advantage of one of China’s fastest-growing economies.