Research report

The A.T. Kearney China City FDI Attractiveness IndexTM 2010

As China’s economy roars ahead—and the country becomes a crucial force for stabilizing the world economy—even tier 2 and 3 Chinese cities are becoming major global players. This Index from A.T. Kearney's China Research Center rates the attractiveness of 30 Chinese cities in respect to foreign direct investment.

A high level summary of the Real Estate Investment Trusts (REITs) regimes in Europe, Asia, the United States and Canada. This summary sets out the key regulatory, tax and legal rules for the establishment and operation of REITs or their local equivalent in all the major jurisdictions of the world which have introduced such a regime.

The office market has benefited from the rebound in the economy with a stable increase in leasing activity seen in Q2 2010. Meanwhile, the office market rental was supported by increased demand. The average rent for Guangzhou grade A office space was RMB 120.5 (US$17.6) per sq m per month at the end of the quarter, a 2.8% increase quarter-on-quarter (q-o-q).

The report examines the variables that define the two main types of industrial real estate sites (infill and greenfield) and concludes that a property owner having a long-term infill strategy enjoys superior occupancy, rental growth and returns, and efficient supply chain operations. In addition, the study shows that infill locations are more sustainable.

Office market heats up

The Beijing grade A office market continued to rebound in the second quarter of 2010, with the average grade A rental increasing by 3.9% quarter-on-quarter (q-o-q) to reach RMB 155.43 (US$22.76) per sq m per month. Meanwhile, the overall availability ratio for grade A office space fell from 18.1% to 15.41%.

Transactions dropped amid uncertainties

The Chinese government has announced a new round of cooling measures which appeared to take effect as the overall value of transactions plunged 60% q-o-q to US$19.46bn.

Office rental sees uplift

The average grade A office transacted rental in Shanghai, China was RMB 6.8 (US$1.0) per sq m per day at the end of Q2 2010. The average city-wide grade A availability ratio reached 12.13%, which represented a decrease of a 0.87 percentage point quarter-on-quarter (q-o-q) and a decrease of 4.25 percentage points year-on-year (y-o-y) respectively.

Demand for commercial premises rises

In Q2, most office tenants were from the financial sector. Foreign enterprises also became active in this quarter. The overall net absorption in the grade A office market was 32,392 sq m and the average rental rose 1.29% quarter-on-quarter (q-o-q), reaching RMB 128.58 (US$18.82) per sq per month.

Deals taper off amid stricter lending conditions in China

According to DTZ's latest Asia Pacific Investment Market Update, the total commercial real estate investment transactions plummeted in the second quarter of 2010 by 49% to reach US$21.5bn as tighter lending policies in China combined with continuing economic uncertainty across the region. Sales volumes in China declined by 62% to reach US$10.1bn with land transactions falling sharply.

Retail rentals continue to rise

The average city-wide grade A office transacted rental stood at RMB 3.80 (US$0.56) per sq m per day at the end of Q2 2010, a decrease of 1.81% quarter-on-quarter (q-o-q) (Figure 1). In Q2 2010, the average availability ratio reached 27.6%, which was a decrease of 2.3 percentage points q-o-q.