Wide-ranging impact on demand for office, retail, logistics and residence
December 23, 2014, Beijing – In the executive meeting of the State Council on December 12, the Premier of the State Council, Mr. Li Keqiang, approved the establishment of free trade zones in the regions of Guangdong, Tianjin and Fujian. Following the Shanghai FTZ project, this second group of city regions was formally made public.
Frank Chen, Executive Director, Head of CBRE Research China, stated that the free trade zones will bring numerous benefits to the economic development of selected regions. A look at Tianjin as a testing ground for reform suggests the free trade zone will explore the innovations found in the government reform proposals and system in combination with the regional characteristics of Beijing-Tianjin-Hebei Region. This creates the opportunity to amass meaningful legal, policy and administrative experience, share that experience with other cities in the region and create more rapid promotion across diverse sectors including the economy, finance, trade and manufacturing industries.
The growth of Tianjin Free Trade Zone will also enhance infrastructure development in both the free trade zone and Tianjin City proper, creating promotion and development of the overall real estate market in Tianjin. Such impacts are primarily reflected in the following aspects:
- Office market: Leasing demand for office space from enterprises attracted by the investment environment of the FTZ is expected to rise and relieve the substantial office oversupply pressure in the Binhai New Area. In addition, potential city-wide economic growth led by the FTZ is expected to push up office demand across Tianjin market.
- Retail market: Demand for retail properties servicing office and residential communities in the FTZ is expected to be driven by the population and income growth in the area. On the other hand, the tariff advantages found in the free trade zone will increase availability and demand for imported goods, create additional high-end consumption across Beijing-Tianjin-Hebei Region, and accordingly promote the upgrading of Tianjin retail market and development of newer retail models such as import brand Outlet centers.
- Logistics market: Trade development in the FTZ will significantly raise requirements on capacity and efficiency of Tianjin’s logistics facilities, driving demand for higher quantity and quality of logistics properties.
- Residential market: The development of the FTZ will create additional employment opportunities in the rising service sector, bolster continued rise of the urban population of Tianjin, increase the demand for the residential space surrounding the FTZ and improve the infrastructure of residential communities.
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