Further to my previous post on real estate, here an interesting update on market trends. There is a growing conflict between the rising rent and the survival of the service sector and offices. A number of restaurants use space that can be either for office or other purposes. Just check the subsequent locations of the well-known restaurant MARE. The previous location is now HSBC…
“Office rents under pressure as vacancies rise”
Source: FCCC Newsletter No 303, 11 February (FLANDERS-CHINA CHAMBER OF COMMERCE)
Office vacancy rates in China will continue to rise in 2013, with rents under pressure after skyrocketing over the past few years, international real estate service provider CBRE said.
Beijing’s rent growth of Grade A offices is expected to slow to about 5% in 2013, as elevated rent levels have decreased tenants’ affordability dramatically over the last three years, Savills said in a report. Grade A office rents in Beijing increased by 0.9% in the fourth quarter of 2012 to CNY317.8 per square meter per month, with annual growth falling to 13.8% from 44.2% in 2011, the report showed. “A number of landlords began to offer more rental incentives to combat slowing demand and retain existing tenants, given the current sluggish economy,” said Joan Wang, head of research at Savills Beijing. The demand for office space across China continued to decrease in 2012 due to a sluggish economy, with net absorption falling by more than 40% year-on-year, statistics from CBRE showed. Many multinational companies suspended their expansion plans in China in 2012, as well as a number of Chinese companies. The amount of new supply decreased by 30% year-on-year. Against a backdrop of significant decrease in demand, vacancy rates increased to 12.8% in 2012, marking the first rise of 1.1 percentage points year-on-year after three consecutive years of decline.
Biz, Economy and More
More serious stuff on business in China
Property: a way to spend the dirty money in China
“Crooked cadres in China prone to hide their dirty money in property”
“Luxury flats are a relatively easy and inconspicuous place to conceal dirty money”
By Jane Cai in Beijing, SCMP, 7 February, 2013
http://www.scmp.com/news/china/article/1144893/crooked-mainland-cadres-prone-hide-their-dirty-money-property
The cancer of corruption is showing its impact on society but people are finding out (finally). The corrupt distort the real estate market, buying properties in bulk, driving prices up, leaving apartments (and even office space) vacant in large quantities. Then we are told there is “high occupancy rate” (of the ones on the market for rent!). Rental prices have gone up in Beijing as a result, making life very difficult for migrant workers who do not have the possibility to buy something (restrictions and too expensive). Service people are harder to get here as they cannot cope anymore with the rising costs. Restaurants, shops and offices are closing down, or move to other locations as rents are too high. I know several restaurants who were successful but had to give up; some had their rent increased by 300%. It is simply unsustainable. The corrupt not only rob the people, they also poison society. How can one still respect the officials if this is not cleaned up?
Yesterday we were driving way out of the city, to the north. I was looking at the rows and rows of huge apartment complexes. Just wondering: they might be all sold, but how many are actually inhabited?
I am told office space is tight. Then why do I see all those vacant spaces in the different SOHO complexes? The explanation: owners do not bother to rent them out. Or their conditions are unrealistic.
Update on China’s energy goals
In “Toxic Capitalism” I detailed China’s plans to improve its energy consumption and energy mix.
Here some recent updates, source: China Daily.
Situation 2012
– Total energy consumption reached 3.62 billion tons of standard coal, up 4% year-on-year
– China will reduce coal consumption’s share of the total energy mix to 65% from 66.4% in 2012.
– Non-fossil fuel consumption took up about 9.1% of the energy mix, up 1.1% year-on-year.
– Natural gas consumption accounted for 5.5% of the total mix
Goals 2015
– Energy consumption will be capped at 4 billion tons of standard coal, and power use will be 6.15 trillion kWh
– Keep oil imports within 61% of total demand
– Energy consumption per unit of GDP will be cut by 16% compared with 2010 levels while energy efficiency will be raised by 38%
– Coal production capacity will reach 4.1 billion tons, but the output will be limited within 3.9 billion tons
– China will raise its non-fossil fuel consumption to 11.4% of primary energy use, with natural gas accounting for 7.5%
– Newly added proven reserves of coal-bed gas will be 1 trillion cubic meters, and shale gas will reach 600 billion cu m.
– Sinopec will own up to 1 billion cubic meters of shale gas production capacity
– Installed generating capacity of nuclear power plants will reach 40 GW
Internet speeds in Beijing: Stone Age conditions
The SCMP reports that Hong Kong has the highest Internet speeds of the world.
The top recorded speed of 54.1 megabits per second was documented in Hong Kong in the third quarter of 2012. The article mentions China averages about 1.6 Mbps
China: what peaks are you talking about? I already become dizzy if I read people complain they have only speeds like 3 Mbps, too slow, as others have 15 Mbps in some countries. In Beijing, despite all our complaints and “upgrading” my download speeds going “straight” are typically 100 kbs if all is well (if not, 20 kbs). Sometimes speeds using one VPN go higher, like 500 kbs, a reason to celebrate. Internet infrastructure in China is still lousy, not even to talk about the censorship. Some of my friends, in newer compounds with less kids surfing for movies and games, report better speeds. Still, feels like being in the Internet Stone Age.
See SCMP “Hong Kong has fastest peak internet speed in world”:
http://www.scmp.com/news/hong-kong/article/1135480/hong-kong-has-fastest-peak-internet-speed-world
Beijing air pollution: nothing new for me
Suddenly everybody notices the bad air in Beijing. Finally I am not the only one.
I have been probably one of the first to publicly point out the bad situation. Just check this blog for earlier posts.
See as an example: https://blog.strategy4china.com/?p=3737
But here you can also find historical data about the distorted figures from the Beijing administration, as well as a guide to what we are talking about. All done years ago and still valid:
About the Beijing API charts: https://blog.strategy4china.com/?page_id=2463
About API and AQI and the impact on health by air pollution: https://blog.strategy4china.com/?page_id=2343.
And all the other entries on air pollution.