Tianjin is a city with a population of more than 12 million people. In 2011 the GDP growth was 16.4% totalling RMB 1,119 Billion. It had a Real Estate investment of RMB108 Billion of which RMB 339.5 Billion were in Retail Sales. 2012 projections are not bad, but aren´t as good as last year and represent a slow down in the city’s economic growth.
One of the points that the Tianjin government makes great efforts in is infrastructure development. This year will see Metro Lines 2 and 3 open, and the conclusion of Line 9. This provides a new world of opportunities in the real estate market. “The opening of new stations means the opening of new retail markets, of new office markets and also improves residential markets.” said Mireille Wan, managing director of CBRE Tianjin.
In addition to the subway development, Tianjin is improving its airport. It is one of the most important air cargo centers in China. Also, Tianjin is connected with Beijing with high speed trains and a motorway. Besides, Tianjin has the most important port in the north of China.
How was Tianjin Real Estate Market in last quarter? (Source: Tianjin Market Overview Q2 2012 by CBRE and Somerset)
Prime Office Market
In the second quarter of 2012, the Tianjin office rents remained stable, edging up by 0.7% q-o-q to RMB $130.7 psm per month. During the quarter, there was no new supply in the prime office market in Tianjin, the average vacancy dropped by 3.9 percentage points over the period to 15.8%.
Luxury Residential Market
In the second quarter of 2012, some commercial banks lowered the mortgage loan interest rate for first-home buyers, and most projects chose to cut their prices so as to boost sales. As a consequence, the Tianjin residential sales market has seen the transaction volume rebounding continuously during the quarter. The average price of luxury apartments dropped by 1.2% q-o-q to RMB 21,290 psm. During the same period, leasing demand for luxury residences turned buoyant, the average luxury apartment rent increasing by 0.9% to RMB 50.28 psm per month.
Prime Retail Market
In the second quarter of 2012, the average ground floor rent of retail properties in Tianjin declined by 1.0% q-o-q to RMB 21.5 psm per day. The 45,000-sm Youyi Gallery located in Qufu road opened with a high occupancy rate, some international retailers such as REPLAY and Miss Sixty chose Youyi Gallery to open their first store in the city. The vacancy rates of newly opened projects are relatively low, and several projects are going through large-scale adjustments in their tenant mix during this quarter, as a result, the overall Tianjin prime retail market vacancy rate is down by 2.9 percentage points q-o-q to 10.8%.
Industrial Market
During the second quarter, due to the scarcity of prime logistics space, the average rent of Tianjin logistics facilities rose by 3.3% to RMB 28.0 psm per month, while the average industrial land price increased by 0.5% to RMB 457.7 psm.
Tianjin has great opportunities in the Real Estate market. Nanjing Road continues being the most important area in the office, retail, and residence market. Haihe Riverfront area has a big influence on the office market in Tianjin. Binhai new area has an important influence on the industrial market, but also is the future of the office market. TEDA and Youyi Road are also important areas of residence and retail markets.
The risk of a mortgage crisis in Tianjin is minimal according to CBRE Tianjin Managing Director. Price speculation is on controllable levels. So concerns need to focus on markets saturation and in the oversupply that the city has in some markets.
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