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 Readers opinion
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Industrial Rentals on a Bull Run
Rents for most of China's key industrial real estate markets in 2007 saw a 10% to 20% year-over-year increase in industrial facility rent. For years industrial rents raised barely a blip as most properties were developed by local governments who tend to focus less on rental income and more on tax generation. In the past 3 to 4 years, China’s industrial real estate market has opened up to local and foreign players looking to develop and acquire industrial property. As the market has slowly started to evolve into a mainstream property sector ripe for investment and developed by international players there was, in 2007, a significant upward push in rental growth. While demand continues to outpace supply, especially in the logistics sector, the market has transitioned to fair market pricing rather than rents being held at below market levels to boost the tax income created for local governments.
Over the last 10 years the barometer for the industrial market has been the amount of annual foreign direct investment (FDI) that is poured into the manufacturing sector and the income that investment creates. The owner-occupier manufacturer is encouraged to invest in a manufacturing facility where the manufacturer exports goods and creates an inflow of foreign currency with tax-collected points at each transaction point along the supply chain.
Following the investment of manufacturers came supporting industries such as suppliers and logistics providers. Additionally, local and international property developers in recent years have played an important role in supporting market diversification, helping to reduce costs and creating more value in supply chains. On the R&D and suburban office front, key infrastructure projects and the urbanization of first tier cities have driven rents upwards in what were once fringe locations. Jeremy Chapman, Senior Vice President of Industrial Real Estate Acquisitions at New City China
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ImpressMedia is an established British publishing house which over the past four years has created a series of real estate magazines in Russia. The most famous of these is Commercial Real Estate, which has become a strong brand in the Russian market, and serves as an important means of communication between suppliers and providers; as well as between real estate professionals seeking to widen their horizons. In 2003, ImpressMedia also started a yearly commercial real estate Awards ceremony, which has now become an integral part of the real estate world in Russia. John Harrison helped create 'Commercial Real Estate' magazine in Russia, and was its first editor, from November 2002 to August 2005. He has written about real estate for over a decade.
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