MIPIM ASIA 2010 Review

May 2011

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MIPIM Asia Review Magazine

www.mipimasia.com Nobel Prizewinning economist Professor Joseph Stiglitz reviews Asia's prospects.

Pages 8 and 35

T H E

O F F I C I A L

China region will lead the world, predicts Justin Chiu.

Page 15

M I P I M

ALSO INSIDE ■ Survey confirms Asia as the

place to be (page 8) ■ China dominates MIPIM Asia Awards (page 16) ■ Keeping it green and profitable — conference report (page 37)

A S I A

M A G A Z I N E

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••• EDITORIAL

Dear Friends, Welcome to this review of MIPIM Asia 2010 and thank you for attending what proved to be a highly successful event that reflected the stabilisation and recovery that is evidently under way in the region. A survey conducted among the over 1,700 delegates who attended the show revealed that the optimism displayed by MIPIM Asia delegates in 2009 has, in 2010, crystallised as a new confidence in the functionality of the Asian markets [see page 8].

This confidence was apparent too in the ambitious projects and propositions that were being showcased at MIPIM Asia. More recently, it was also clearly evident in the level of interest, both from and in Asia’s real estate markets, demonstrated at MIPIM Asia’s sister show MIPIM, staged in Cannes, France, during March 2011.

Filippo Rean

Asia and its markets are always a strong theme during MIPIM, but this year especially so, as revealed by the attendance at MIPIM's now traditional Asian Lunch — sponsored by the city of Chongqing, China — and during the Asiathemed conference sessions.

Together, MIPIM Asia and MIPIM highlight just how strong is the connection between real estate markets and investments, both for Western players interested in Asian property and capital, and vice versa. MIPIM Asia is positioned to be the meeting point for Asian and other international real estate professionals aiming at Asian projects and assets, or at raising capital from Asian investors.

The increasing sophistication, improvement in professional standards and growing transparency in Asia’s property markets underlines the requirement for knowledge of all types. This is also apparent in the popularity of the MIPIM Asia conference content. At MIPIM Asia 2011 (November 15-17) this will be further enhanced in response to preferences indicated by you, the show's participants.

We will offer even stronger content with more specialised sessions and more expert speakers. For instance, in response to the demand for market information, there will be greater focus on China’s real estate markets and the practicalities of investment there.

MIPIM Asia’s formalised networking events such as themed lunches and power meetings are so popular because they make meetings highly effective and to-thepoint, maximising the return on your attendance at the show. Participants have told us they want more of these events and MIPIM Asia is responding to that.

Also, the floor plan of the MIPIM Asia show area is being modified to improve the efficiency of pedestrian flow around the space, to integrate better the exhibition and conference areas and to increase the opportunities for informal networking.

We believe that the new-look MIPIM Asia that will be unveiled this November will provide a brand new experience and we look forward to seeing you there.

Lastly, but not least, we were delighted to meet so many Japanese property professionals at MIPIM Asia 2010 and were deeply saddened by the multiple catastrophes that have beset their country since March. We would like to take the opportunity to extend our deepest sympathy to them with a heartfelt wish that their situation rapidly improves.

Kind regards Filippo Rean – MIPIM & MIPIM Asia Director

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••• CONTENTS

NEWS

MIPIM Asia Review Magazine May 2011 Director of Publications: Paul Zilk Editorial Department Editor in Chief: Paul Strohm • Sub Editors: Phil Sommerich, Joanna Stephens • Proof Reader: Debbie Lincoln • Technical Editor in Chief: Herve Traisnel • Deputy Technical Editor in Chief: Frederic Beauseigneur • Graphic Designer: Carole Peres • Editorial management: Boutique Editions Ltd. Publishing Department Content Director: Jean-Marc Andre • Publications Production and Development Manager: Martin Screpel • Publishing Product Manager: Chealsy Choquette • Publishing Coordinators: Emilie Lambert, Amrane Lamiri, David Le Chapelain, Bruno Piauger • Production Assistant: Veronica Pirim • Production Assistant, Cannes office: Eric Laurent • Printer: Riccobono Imprimeurs, Le Muy (France) Administrative & Advertising Department Real Estate Division Director: Christophe Chupot • MIPIM & MIPIM Asia Director: Filippo Rean • Commercial Director: Julien Sausset • Sales Director Investors, Corporate End-Users and Hotel Groups: Aude Fraisse • Sales Manager Investors, Corporate EndUsers & Hotel Groups: Claire Chaussidiere • Regional Director of Sales: Christine Lam • UK Managing Director: Peter Rhodes OBE • Senior Vice President (USA): Patric Dolan Published by Reed MIDEM • BP 572 • 11, rue du Colonel Pierre Avia • 75726 Paris Cedex 15, France • Contents © 2011, Reed MIDEM Market Publications • Publication registered 2nd quarter 2011

Growing confidence confirms Asia “really is the place to be” .........................................................................8 Hong Kong’s focus on built heritage a sign of civic pride ..............................................................................12 China region will lead world into the future, predicts Justin Chiu ................................................................15 Urban renewal is optimum use of Hong Kong’s ‘precious land’....................................................................19 Golden Decade dawns as Taiwan learns to invest more in itself ...................................................................23 Japan - Prime residential property finds investors receptive .......................................................................25 Korea Pavilion opens door to wealth of opportunity ......................................................................................26 Australia – Perth sets its sights on hotel investors with staying power........................................................28 Retail – Aeon shops for new partners in pan-Asian expansion drive ............................................................30 Professional – Green buildings find favour with occupiers, says RICS .........................................................31 Marina Bay Sands adds luxury resort to downtown Singapore .....................................................................32 Paris woos Asian investors with fundamental charms..................................................................................33

MIPIM ASIA IN PICTURES First day ..........................................................................................................................................................10 Around the aisles ............................................................................................................................................24 Speaker sessions............................................................................................................................................34

MIPIM ASIA AWARDS

16

FEATURES Recovery begins at home Don’t count on the West, Nobel Prize-winning economist Professor Joseph Stiglitz warned delegates in his MIPIM Asia keynote.....................................................................................35 Why second is best Secondary property represents the opportunity of a lifetime, according to CB Richard Ellis research chief Nick Axford..................................................................................................36

www.mipimasia.com Printed on 100% recycled paper

ISSN1961-0211

Green and grateful Property investments can be both environmentally and economically sustainable, a MIPIM Asia conference heard ......................................................................................................................37

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••• NEWS

Property boosts living standards REAL estate has a critical role to play in improving living standards and sustaining the economy, according to Nobel Prize-winning economist Professor Joseph Stiglitz, who delivered MIPIM Asia’s main keynote address.

Stiglitz told a packed auditorium that, in the face of the global economic downturn, Asia had outperformed both the US and Europe, and has strong growth potential. He added: "Strong infrastructure investment, especially green investment, will provide a basis for long-term economic growth.”

More on page 35

Joseph Stiglitz

Pitched perfectly THIS YEAR saw new networking concepts added to MIPIM Asia’s tried, tested and popular formats.

Power Meetings made their debut.

Based on the ‘speed dating’ template, these provided participants with the opportunity to present a three-minute pitch to a senior realestate professional. After three minutes, the gong sounded and it was time to do it all over again.

Four themes — tenants, tourism and hospitality, investors and China — ensured that the Power Meetings were focused and effective.

China triumphs PROJECTS based in China made almost a clean sweep of the MIPIM Asia 2010 Awards, picking up seven of the 10 prizes. Among the winners were Beijing's Parkview Green FangCaoDi shopping, office and hotel complex, which won in the Green Buildings category; and the Shanghai IFC Mall, which picked up the top prize in the Shopping Mall category.

Full details on page 16

Growing confidence confirms Asia “really is the place to be” IN ONE year, the mood among Asian property professionals has improved from “increased optimism” to “confidence in the ability of the regional economy to function”.

That was the conclusion of a survey conducted by academic staff and students of the Wisconsin School of Business among delegates attending the fifth edition of MIPIM Asia, staged at Hong Kong Convention and Exhibition Centre last November.

“Two thirds of participants tell us their business is better than in the same quarter last year, with less than 10% feeling worse,” said Professor Francois Ortalo-Magne, chairman of the department of real estate and urban land economics at the Wisconsin School of Business. “Asia really is the place to be.”

Ortalo-Magne added that there

were two prevailing themes: first, China is leading the way; second there are increasing cross-border flows throughout the region.

MIPIM Asia’s blend of exhibition, conferences and structured networking opportunities attracted more than 1,720 participants in 2010, representing nearly 800 companies and 40 countries. There were 150 exhibitors and sustainable urban renewal was a strong theme among them. Some of the region's most ambitious urban-renewal projects were showcased, including the Shanghai Huangpu River Banks Comprehensive Development Project and Hong Kong's 320 ha Kai Tak development.

Over 400 international investors attended MIPIM Asia, where the opportunities on offer ranged from Western Australia's state capital

Wisconsin School of Business’ Francois Ortalo-Magne: “Increased optimism”

Perth seeking $9bn in international investment for urban renewal projects to Taiwan's 30 infrastructure and urban-renewal schemes, worth a total of $70bn.

Date set for new-look MIPIM Asia FIVE years after MIPIM Asia was first staged in Hong Kong, its organisers “remain committed and resolute that the concept makes sense”, said Reed MIDEM CEO Paul Zilk.

Zilk is “strongly enthusiastic” about MIPIM Asia. He said that, even though there have been challenges and changes over the past few years, one key element that has remained steadfast is the strong support offered by Hong Kong and its government.

Zilk also confirmed that MIPIM Asia 2011 would be held at the Hong Kong Convention and Exhibition Centre from November 15-17, 2011.

According to MIPIM and MIPIM Asia’s new director, Filippo Rean, participants can expect still more

8 / M I P I M A S I A R E V I E W M AGA Z I N E 2 0 1 1

improvements at the 2011 show.

Programme content will be further enhanced: the ever-popular plenary sessions will be retained, but the technical focus will be boosted with the introduction of a variety of

new workshop formats.

“Furthermore, the exhibition floor will change shape,” to increase the already strong interaction between exhibitors and participants,” Rean said.

Filippo Rean, MIPIM Asia: 2011 programme content will be further enhanced

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10-R16_MASREV16+D_Mise en page 1 27/04/11 10:03 Page1

F I R S T DAY

The show begins AFTER THE HONG KONG GOVERNMENT’S SECRETARY FOR DEVELOPMENT CARRIE LAM INAUGURATED MIPIM ASIA IN A TRADITIONAL CEREMONY THAT INVOLVED DOTTING THE LION’S EYE, A VIP TOUR OF THE EXHIBITION FLOOR FOLLOWED. THAT EVENING THE OPENING COCKTAIL PROVIDED AN IDEAL OPPORTUNITY FOR NETWORKING.

Carrie Lam visits the Taiwan...

...and Singapore pavilions

First night cocktails...

...provide a chance to catch up

10 / M I P I M A S I A R E V I E W M AGA Z I N E 2 0 1 1

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"UILD " UILD

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••• NEWS

Hong Kong’s focus on built heritage sign of civic pride HONG Kong has become more protective of its built heritage — a change that has made creating a balance between conservation and redevelopment harder for its government. But according to CY Leung, chairman of DTZ Asia Pacific, this change in attitude is an indication that Hong Kong is “gelling into a community”.

“The government is facilitating redevelopment by private developers,” Leung said. “Parts of the building stock are ageing quickly and the only way to deal with them is by redevelopment.” He added that the Urban Renewal Authority has to tread a line between facilitating the development of strata-title buildings and protecting the interests of small building owners.

“The other line that we are treading is striking a balance between conservation and development,” Leung said. He referred to the proposed demolition of the King Yin Lei building, a 1930s residential mansion that was saved following a public outcry.

“The public’s wish to conserve parts of our old building stock is a new thing,” Leung said. “Before 1997, Hong Kong was regarded as a borrowed place on borrowed time, and people had that kind of mind set.

A large part of the population, due to political uncertainty, was looking to emigrate and the whole of Hong Kong could be thrown away.” He added that attitudes have changed now there is no longer an “expiry date” on Hong Kong’s future.

DTZ Asia Pacific’s CY Leung: Hong Kong is “gelling into a community”

Leung observed that the younger generation wants to keep what many older people regard as not worth preserving. An example is the old Star Ferry Pier. “It has no particular architectural merit and it’s not old,” he said. “It’s just a

lump of concrete, so why preserve it? But the young people say, ‘We grew up with it. It’s what we know’.

To me, this is very heartening. It tells me that people in Hong Kong are gelling into a community, which is something that we sorely need.”

Huangpu River Banks on course

Xu Ru-Qing, Shanghai Huangpu River Banks Development Construction Investment (Holdings): “A good chance to show the MIPIM Asia audience the progress we have made along the Huangpu River Banks”

12 / M I P I M A S I A R E V I E W M AGA Z I N E 2 0 1 1

SHANGHAI’s massive Huangpu River Banks scheme is proceeding apace — and the organisation responsible for its development was at MIPIM Asia to promote the project.

“We think this is a good chance to show the MIPIM Asia audience the progress we have made along the Huangpu River Banks and answer all the questions that people have about the city,” said Xu Ru-Qing, vice-president of Shanghai Huangpu River Banks Development Construction Investment (Holdings).

At MIPIM Asia for the second time, the Shanghai government investment agency is responsible for the comprehensive urban planning of seven districts bordering the waterfront of the Huangpu river on both the Puxi and Pudong sides of Shanghai. The Huangpu River

Banks project was launched in 2002 with the objective of redeveloping and transforming industrial sites for service-industry uses while maintaining the heritage of the city.

“Our presentation in the Pearl Room gave us the chance to communicate with companies in Hong Kong and to talk about the long-lasting city development, as well as the future of the city following the 2010 Shanghai World Expo,” Xu said.

He added that the various networking events at MIPIM Asia provided delegates with a range of marketing opportunities. “MIPIM Asia is really well organised,” he added. “Most of the thousands of people who come here are at a high level in their companies, so it is helpful for us to communicate with them.”

111_ONG ONG_RV_ASIA__ 13/04/11 11:56 Page1

6_contents_Mise en page 1 02/05/11 16:41 Page1

••• CONTENTS

NEWS

MIPIM Asia Review Magazine May 2011 Director of Publications: Paul Zilk Editorial Department Editor in Chief: Paul Strohm • Sub Editors: Phil Sommerich, Joanna Stephens • Proof Reader: Debbie Lincoln • Technical Editor in Chief: Herve Traisnel • Deputy Technical Editor in Chief: Frederic Beauseigneur • Graphic Designer: Carole Peres • Editorial management: Boutique Editions Ltd. Publishing Department Content Director: Jean-Marc Andre • Publications Production and Development Manager: Martin Screpel • Publishing Product Manager: Chealsy Choquette • Publishing Coordinators: Emilie Lambert, Amrane Lamiri, David Le Chapelain, Bruno Piauger • Production Assistant: Veronica Pirim • Production Assistant, Cannes office: Eric Laurent • Printer: Riccobono Imprimeurs, Le Muy (France) Administrative & Advertising Department Real Estate Division Director: Christophe Chupot • MIPIM & MIPIM Asia Director: Filippo Rean • Commercial Director: Julien Sausset • Sales Director Investors, Corporate End-Users and Hotel Groups: Aude Fraisse • Sales Manager Investors, Corporate EndUsers & Hotel Groups: Claire Chaussidiere • Regional Director of Sales: Christine Lam • UK Managing Director: Peter Rhodes OBE • Senior Vice President (USA): Patric Dolan Published by Reed MIDEM • BP 572 • 11, rue du Colonel Pierre Avia • 75726 Paris Cedex 15, France • Contents © 2011, Reed MIDEM Market Publications • Publication registered 2nd quarter 2011

Growing confidence confirms Asia “really is the place to be” .........................................................................8 Hong Kong’s focus on built heritage a sign of civic pride ..............................................................................12 China region will lead world into the future, predicts Justin Chiu ................................................................15 Urban renewal is optimum use of Hong Kong’s ‘precious land’....................................................................19 Golden Decade dawns as Taiwan learns to invest more in itself ...................................................................23 Japan - Prime residential property finds investors receptive .......................................................................25 Korea Pavilion opens door to wealth of opportunity ......................................................................................26 Australia – Perth sets its sights on hotel investors with staying power........................................................28 Retail – Aeon shops for new partners in pan-Asian expansion drive ............................................................30 Professional – Green buildings find favour with occupiers, says RICS .........................................................31 Marina Bay Sands adds luxury resort to downtown Singapore .....................................................................32 Paris woos Asian investors with fundamental charms..................................................................................33

MIPIM ASIA IN PICTURES First day ..........................................................................................................................................................10 Around the aisles ............................................................................................................................................24 Speaker sessions............................................................................................................................................34

MIPIM ASIA AWARDS

16

FEATURES Recovery begins at home Don’t count on the West, Nobel Prize-winning economist Professor Joseph Stiglitz warned delegates in his MIPIM Asia keynote.....................................................................................35 Why second is best Secondary property represents the opportunity of a lifetime, according to CB Richard Ellis research chief Nick Axford..................................................................................................36

www.mipimasia.com Printed on 100% recycled paper

ISSN1961-0211

Green and grateful Property investments can be both environmentally and economically sustainable, a MIPIM Asia conference heard ......................................................................................................................37

113_GRI_RV_PIM__ 14/04/11 09:50 Page1

8-R1_MASREV01+D2_Mise en page 1 03/05/11 12:30 Page1

••• NEWS

Property boosts living standards REAL estate has a critical role to play in improving living standards and sustaining the economy, according to Nobel Prize-winning economist Professor Joseph Stiglitz, who delivered MIPIM Asia’s main keynote address.

Stiglitz told a packed auditorium that, in the face of the global economic downturn, Asia had outperformed both the US and Europe, and has strong growth potential. He added: "Strong infrastructure investment, especially green investment, will provide a basis for long-term economic growth.”

More on page 35

Joseph Stiglitz

Pitched perfectly THIS YEAR saw new networking concepts added to MIPIM Asia’s tried, tested and popular formats.

Power Meetings made their debut.

Based on the ‘speed dating’ template, these provided participants with the opportunity to present a three-minute pitch to a senior realestate professional. After three minutes, the gong sounded and it was time to do it all over again.

Four themes — tenants, tourism and hospitality, investors and China — ensured that the Power Meetings were focused and effective.

China triumphs PROJECTS based in China made almost a clean sweep of the MIPIM Asia 2010 Awards, picking up seven of the 10 prizes. Among the winners were Beijing's Parkview Green FangCaoDi shopping, office and hotel complex, which won in the Green Buildings category; and the Shanghai IFC Mall, which picked up the top prize in the Shopping Mall category.

Full details on page 16

Growing confidence confirms Asia “really is the place to be” IN ONE year, the mood among Asian property professionals has improved from “increased optimism” to “confidence in the ability of the regional economy to function”.

That was the conclusion of a survey conducted by academic staff and students of the Wisconsin School of Business among delegates attending the fifth edition of MIPIM Asia, staged at Hong Kong Convention and Exhibition Centre last November.

“Two thirds of participants tell us their business is better than in the same quarter last year, with less than 10% feeling worse,” said Professor Francois Ortalo-Magne, chairman of the department of real estate and urban land economics at the Wisconsin School of Business. “Asia really is the place to be.”

Ortalo-Magne added that there

were two prevailing themes: first, China is leading the way; second there are increasing cross-border flows throughout the region.

MIPIM Asia’s blend of exhibition, conferences and structured networking opportunities attracted more than 1,720 participants in 2010, representing nearly 800 companies and 40 countries. There were 150 exhibitors and sustainable urban renewal was a strong theme among them. Some of the region's most ambitious urban-renewal projects were showcased, including the Shanghai Huangpu River Banks Comprehensive Development Project and Hong Kong's 320 ha Kai Tak development.

Over 400 international investors attended MIPIM Asia, where the opportunities on offer ranged from Western Australia's state capital

Wisconsin School of Business’ Francois Ortalo-Magne: “Increased optimism”

Perth seeking $9bn in international investment for urban renewal projects to Taiwan's 30 infrastructure and urban-renewal schemes, worth a total of $70bn.

Date set for new-look MIPIM Asia FIVE years after MIPIM Asia was first staged in Hong Kong, its organisers “remain committed and resolute that the concept makes sense”, said Reed MIDEM CEO Paul Zilk.

Zilk is “strongly enthusiastic” about MIPIM Asia. He said that, even though there have been challenges and changes over the past few years, one key element that has remained steadfast is the strong support offered by Hong Kong and its government.

Zilk also confirmed that MIPIM Asia 2011 would be held at the Hong Kong Convention and Exhibition Centre from November 15-17, 2011.

According to MIPIM and MIPIM Asia’s new director, Filippo Rean, participants can expect still more

8 / M I P I M A S I A R E V I E W M AGA Z I N E 2 0 1 1

improvements at the 2011 show.

Programme content will be further enhanced: the ever-popular plenary sessions will be retained, but the technical focus will be boosted with the introduction of a variety of

new workshop formats.

“Furthermore, the exhibition floor will change shape,” to increase the already strong interaction between exhibitors and participants,” Rean said.

Filippo Rean, MIPIM Asia: 2011 programme content will be further enhanced

022_NIKKEI BP_PV_ASIA__ 17/09/10 18:41 Page1

10-R16_MASREV16+D_Mise en page 1 27/04/11 10:03 Page1

F I R S T DAY

The show begins AFTER THE HONG KONG GOVERNMENT’S SECRETARY FOR DEVELOPMENT CARRIE LAM INAUGURATED MIPIM ASIA IN A TRADITIONAL CEREMONY THAT INVOLVED DOTTING THE LION’S EYE, A VIP TOUR OF THE EXHIBITION FLOOR FOLLOWED. THAT EVENING THE OPENING COCKTAIL PROVIDED AN IDEAL OPPORTUNITY FOR NETWORKING.

Carrie Lam visits the Taiwan...

...and Singapore pavilions

First night cocktails...

...provide a chance to catch up

10 / M I P I M A S I A R E V I E W M AGA Z I N E 2 0 1 1

003_FACILITY MEDIA_RV_ASIA__ 10/09/10 15:47 Page1

"UILD " UILD

12-R2_MASREV02+D2_Mise en page 1 27/04/11 10:06 Page1

••• NEWS

Hong Kong’s focus on built heritage sign of civic pride HONG Kong has become more protective of its built heritage — a change that has made creating a balance between conservation and redevelopment harder for its government. But according to CY Leung, chairman of DTZ Asia Pacific, this change in attitude is an indication that Hong Kong is “gelling into a community”.

“The government is facilitating redevelopment by private developers,” Leung said. “Parts of the building stock are ageing quickly and the only way to deal with them is by redevelopment.” He added that the Urban Renewal Authority has to tread a line between facilitating the development of strata-title buildings and protecting the interests of small building owners.

“The other line that we are treading is striking a balance between conservation and development,” Leung said. He referred to the proposed demolition of the King Yin Lei building, a 1930s residential mansion that was saved following a public outcry.

“The public’s wish to conserve parts of our old building stock is a new thing,” Leung said. “Before 1997, Hong Kong was regarded as a borrowed place on borrowed time, and people had that kind of mind set.

A large part of the population, due to political uncertainty, was looking to emigrate and the whole of Hong Kong could be thrown away.” He added that attitudes have changed now there is no longer an “expiry date” on Hong Kong’s future.

DTZ Asia Pacific’s CY Leung: Hong Kong is “gelling into a community”

Leung observed that the younger generation wants to keep what many older people regard as not worth preserving. An example is the old Star Ferry Pier. “It has no particular architectural merit and it’s not old,” he said. “It’s just a

lump of concrete, so why preserve it? But the young people say, ‘We grew up with it. It’s what we know’.

To me, this is very heartening. It tells me that people in Hong Kong are gelling into a community, which is something that we sorely need.”

Huangpu River Banks on course

Xu Ru-Qing, Shanghai Huangpu River Banks Development Construction Investment (Holdings): “A good chance to show the MIPIM Asia audience the progress we have made along the Huangpu River Banks”

12 / M I P I M A S I A R E V I E W M AGA Z I N E 2 0 1 1

SHANGHAI’s massive Huangpu River Banks scheme is proceeding apace — and the organisation responsible for its development was at MIPIM Asia to promote the project.

“We think this is a good chance to show the MIPIM Asia audience the progress we have made along the Huangpu River Banks and answer all the questions that people have about the city,” said Xu Ru-Qing, vice-president of Shanghai Huangpu River Banks Development Construction Investment (Holdings).

At MIPIM Asia for the second time, the Shanghai government investment agency is responsible for the comprehensive urban planning of seven districts bordering the waterfront of the Huangpu river on both the Puxi and Pudong sides of Shanghai. The Huangpu River

Banks project was launched in 2002 with the objective of redeveloping and transforming industrial sites for service-industry uses while maintaining the heritage of the city.

“Our presentation in the Pearl Room gave us the chance to communicate with companies in Hong Kong and to talk about the long-lasting city development, as well as the future of the city following the 2010 Shanghai World Expo,” Xu said.

He added that the various networking events at MIPIM Asia provided delegates with a range of marketing opportunities. “MIPIM Asia is really well organised,” he added. “Most of the thousands of people who come here are at a high level in their companies, so it is helpful for us to communicate with them.”

109_PROPERTYWEEK_RV_ASIA__ 29/03/11 16:08 Page1

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••• NEWS

China region will lead world into the future, predicts Justin Chiu

Justin Chiu, Cheung Kong Holdings: “I take pride in the fact that we have the most expensive offices in the world. It’s why I am a developer”

SPEAKING at the Meet The Chairmen conference session, Justin Chiu, executive director of Cheung Kong Holdings, looked to the future and predicted that the greatest area of opportunity would be the Chinese region, including China, Hong Kong, Taiwan and Singapore.

“Everyone is looking to the Chinese region for investment,” he said, observing that the area has experienced a substantial rebound. He added that, since the SARS scare, office rents in Hong

Kong have increased by 30%40% and, this year, passed their pre-crisis peak.

“I take pride in the fact that we have the most expensive offices in the world. It’s why I am a developer,” he said.

Wilfred Wong, executive chairman of Greater China for Pacific Star Group, said that, after each cycle, “China has always managed to have a soft landing”. He suggested that this is because China’s economy is still not a full-market mechanism.

Wong urged investors to exercise prudence when investing in much of Asia: “I would tread very carefully next year because of the liquidity that is going to be pumped into the system. The QE2 [second round of quantitative easing] that is going into Asia is going to cause some asset inflation.”

You are unlikely to lose too much, Wong added, if you are changing a deflating currency — such as the US dollar — into bricks and mortar. “But if you are looking at longer term investments I would go to China,” he said.

The downturn was an unexpected blessing for the Asia Pacific region, according to Keith Griffiths, chairman of architect Aedas, “because what happened is that China invested internally. When the taps are turned back on in the western world, China is going to grow exponentially.”

Nevertheless, Griffiths cautions: “With the boom comes the opportunity to be a lot more holistic and a lot more careful in our thinking. Let’s build well for the next 10 years.”

Pacific Star Group’s Wilfred Wong: “I would tread very carefully next year [2011] because of the liquidity that is going to be pumped into the system”

Aedas’ Keith Griffiths: “With the boom comes the opportunity to be a lot more holistic and a lot more careful in our thinking”

Asian pensions need more property

APREA’s Peter Mitchell: “Asian pension funds tend to be less familiar with real estate as an asset class, which reflects in their underallocation”

ASIA faces a dramatic increase in its dependent population — and property should play an increasing part in preparing for it, according to Peter Mitchell, CEO of the Asia Pacific Real Estate Association (APREA).

Mitchell explained that, while the proportion of people aged 65 and over in Japan was 30% in 2005, by 2050 it would be 74%. The position will not be much better elsewhere.

In Hong Kong, Taiwan and Korea, it will stand at around 65%, in

Singapore 53% and in China 36%.

“But that is still an enormous number of people,” Mitchell said.

APREA has been concerned about the way that Asian pension funds allocate investments and has produced a study that reveals low allocations to real estate.

“Asian pension funds tend to be less familiar with real estate as an asset class, which reflects in their underallocation,” Mitchell said. “They tend to have a very conservative approach to investment and many invest pre-

dominantly in fixed-interest securities — some as much as 80% of their funds.”

He added, however, that there is change afoot, with champions such as the National Pension Service of Korea and the Employee Provident Fund in Malaysia leading the way.

For other pension funds, Mitchell identified a cautious approach, unfamiliarity with real estate and a lack of internal capabilities as obstacles to increased real-estate allocations.

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China tops awards list CHINA dominated the MIPIM Asia 2010 Awards, with projects located there picking up seven of the 10 prizes, a phenomenon that clearly reflects the vibrancy of China’s property markets.

The MIPIM Asia Awards jury, an international panel of experts chaired by Dr Robert Lie, Redevco Asia’s managing director, met in Hong Kong last September to examine the 79 entries from 10 countries which included Australia, China, India, Japan, Macau, Malaysia, Singapore, South Korea, Hong Kong and Vietnam. For each of the eight awards three projects were nominated for the shortlist and final selection by MIPIM Asia participants.

Lie said the number of high-quality projects from countries across Asia entered in this year's competition was a “clear reflection of the continued growth and development of this dynamic region”. The large number of entries from China meant MIPIM Asia Awards Trophy that the special category Best Chinese Project could be continued.

Two additional awards were again made during the ceremony. The jurors selected their favourite for the Special Jury Award and the project that received the most votes in Hong Kong in all categories received the Participants Choice Award.

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The MIPIM Asia 2010 Jury

••• MIPIM ASIA AWARDS 2010

PRESIDENT OF THE JURY

Dr Robert LIE Managing Director Real Estate Investment & Development Redevco Asia Limited Hong Kong

MIPIM Asia Awards 2010 winners

Stanley CHING

CATEGORIES

Managing Director and Head of Real Estate Group Citic Capital Hong Kong

Richard DAVID

Best Chinese Project

Business Centres

Managing Director Treasury Holdings China Limited China

Anna KWONG Chairman Hong Kong Institute of Architects Hong Kong

Charles LAM Managing Director - Greater China Pramerica Real Estate Investors Asia China

Cheng-Soon LAU Managing Director Invesco Real Estate Asia Hong Kong

Morgan LAUGHLIN Managing director, Head of Japan Coverage & Origination The Royal Bank of Scotland Japan

Elizabeth LOH

Wai Tan Yuan

Borneo Convention Centre

Shanghai, China

Kuching, Sarawak, Malaysia

Master Developer: Shanghai Bund Investment (Group) Co., Ltd. Developer: The Peninsula Shanghai Waitanyuan Hotel Company Ltd, Shanghai Bund de Rockefeller Group Master Development Co. Ltd Architects: Gregotti Associati International Srl, Brennan Beer Gorman, Pierre-Yves Rochon, Callison LLC, Kokaistudios, Shanghai Zhang Ming Architectural Design Firm

Developer: Cahya Mata Sarawak Berhad Architect: Arkitek KDI Sdn Bhd

Futura Projects

Green Buildings

Head of Asia Generali Immobiliare Hong Kong Hong Kong

Nicholas LOUP Chief Executive Grosvenor Asia-Pacific Hong Kong

Richard VAN DEN BERG Managing Director Asia ING Real Estate Investment Management Hong Kong

Kam Sing WONG Chairman Professional Green Building Council Hong Kong

National Heart Centre

Parkview Green FangCaoDi

Singapore

Beijing, China

Landscape design: ONG&ONG Pte Ltd Architect: Broadway Malyan

Developer: Beijing Chyau Fwu Properties Co Ltd Project Architect: Integrated Design Associates

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••• MIPIM ASIA AWARDS 2010

Hotels and Tourism Resorts

Mixed-use Buildings

Residential Developments

Wai Tan Yuan Shanghai, China

The Peninsula Shanghai Shanghai, China Developer: SPG LAND (Holdings) Ltd Concept Architect: BBG Architects (New York) Executive Architect: Aedas Architects Limited

Shopping Centres

Master Developer: Shanghai Bund Investment (Group) Co., Ltd. Developer: The Peninsula Shanghai Waitanyuan Hotel Company Ltd, Shanghai Bund de Rockefeller Group Master Development Co. Ltd Architects: Gregotti Associati International Srl, Brennan Beer Gorman, Pierre-Yves Rochon, Callison LLC, Kokaistudios, Shanghai Zhang Ming Architectural Design Firm

Special Jury Award

Shanghai ifc mall

72 Sentosa Cove Singapore Architect: ONG&ONG Pte Ltd

Participants Choice Award

Shanghai ifc mall

Shanghai, China

800SHOW Creative Park

Shanghai, China

Developer: Sun Hung Kai Properties Limited Architect: Pelli Clarke, Pelli Architects, P&T International Inc. Retail Interior Designer: Benoy Ltd

Shanghai, China

Developer: Sun Hung Kai Properties Limited Architect: Pelli Clarke, Pelli Architects, P&T International Inc. Retail Interior Designer: Benoy Ltd

18 / MIPIM ASIA REVIEW MAGAZINE 2011

Architect: Iogon Developer: Shanghai 800 Show Management Co.

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••• NEWS — HONG KONG

Urban renewal is optimum use of Hong Kong’s ‘precious land’ HONG Kong’s continuing property boom, excepting the short dip in late 2008 due to the financial crisis, has created new jobs and stimulated the economy. But on the downside, it has put pressure on the supply of housing land — and that has put the government under pressure to help those aspiring to home ownership.

As Carrie Lam, secretary for development of the Government of the Hong Kong Special Administrative Region, explained at the MIPIM Asia opening ceremony, one solution to which it has turned is the re-use of brownfield land in the urban centre.

Lam added that urban renewal “is our way to more efficiently put to optimum re-use our precious land

resources in the centre of urban Hong Kong”.

Lam said that the government’s first objective is not increasing values but regenerating the city centre and improving the lot of citizens living in dilapidated environments.

Between 2001 and 2009, the Urban Renewal Authority (URA), in partnership with private developers, redeveloped around 65 old buildings per year, creating around 12,000 apartments, over 328,000 sq m of commercial space, offices and hotels, and about 53,000 sq m of government, institutional and community facilities.

And there is no on-going shortage of stock, according to Lam. She said that there are about 4,000 buildings aged 50 years or over in

Hong Kong — a figure that is increasing by 500 each year because of the number of 1950s and 1960s concrete-built housing blocks.

Some streamlining has been necessary. Lam said that the URA's redevelopment projects have increasingly encountered local resistance because of the “topdown approach” to planning developments.

This is set to change, however.

About a month before MIPIM Asia was staged, the secretary for development for the Hong Kong Government’s development bureau announced a revised, more inclusive urban renewal strategy, “embodying three core values: public participation, district based and people centred”, Lam said.

Carrie Lam, secretary for development of the Government of the Hong Kong Special Administrative Region: Urban renewal “is our way to more efficiently put to optimum re-use our precious land resources in the centre of urban Hong Kong”

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••• NEWS — HONG KONG

Redeveloped Kai Tak airport to become the city’s new ‘gateway to the seas’ THE REDEVELOPMENT of Hong Kong’s former international airport, Kai Tak, was a central element of the Hong Kong Pavilion, which made its debut at MIPIM Asia 2010.

Kai Tak was one of 10 major infrastructure projects given the go-ahead by the Hong Kong government in 2007. Since then, plans for the development of the 320 ha site have progressed and construction is already under way on a cruise terminal, which will service some of the largest cruise liners in the world.

Kai Tak will be served by a district cooling system and an environmentally friendly transport system.

It will have a multi-purpose stadium with a retractable roof and 45,000 fixed seats. The site will also become home to about 86,000 residents — the plans include 13,000

Kai Tak: development plans for the former airport were a prominent part of the new Hong Kong Pavilion

rental flats. Around 30% of the land area will be public open space and, as well as a 24 ha metro park, waterfront areas are to be opened to the public to provide a continuous 10 km promenade.

Extensive public consultation pre-

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ceded the development. As Carrie Lam, secretary for development of the Government of the Hong Kong Special Administrative Region, said in the speech that opened MIPIM Asia, the result is a blueprint “with the vision to develop Kai

Tak into a distinguished, vibrant, attractive and people-oriented place by the harbour to showcase this harbour-front city”.

The site will be transformed from a "gateway to the sky" into a "gateway to the seas", Lam added.

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••• NEWS — TAIWAN

Golden Decade dawns as Taiwan learns to invest more in itself

Dr Christina Liu, Taiwan’s minister of economic planning and development: “This is a very exciting period for Taiwan”

TAIWAN is heading into a golden era, according to the country’s minister of economic planning and development, Dr Christina Liu. Liu told MIPIM Asia participants that the next 10 years would see Taiwan change its emphasis from exports to domestic demand following the 2009 launch of what the government has dubbed ‘The Golden Decade’.

Liu observed that in Taiwan, particularly during the past 10 years, the export sector has been the driving force for economic growth.

“But we would like to resume having investment and exports as the double engine of our economic

growth,” she said. “That’s why, in Taiwan, our domestic demand is really going to be picking up.”

She added: “After the economic crisis, we all know that we did not consume enough and did not invest enough. In a way, we were not nice enough to ourselves. Starting from now, we have learned the lesson that we should invest more for ourselves and consume more for ourselves, which is why this is a very exciting period for Taiwan and for Asia.”

Liu reported that first quarter economic growth in 2010 was 13.7%, with 12.5% in the second quarter.

Of the first quarter’s figure, 11%

was accounted for by domestic demand, while exports contributed around 2%.

She said that structural challenges are making this an interesting time to invest in Taiwan: “Looking at infrastructure, Taiwan does not seem as competitive as other places, which is why we need all of you to come over to Taiwan to help us with that.”

Taiwan has several advantages for the investor, Liu added, including technology, innovation, flexibility, diligence, an international perspective and an understanding of mainland China.

Rise in domestic demand will take up slack TAIWAN’s minister of economic planning and development, Dr Christina Liu, told MIPIM Asia Review that real estate could be the beneficiary of inflationary pressures brought on by a second wave of quantitative easing in the US. “When capital flows to emerging markets, real-estate assets are relatively easy to obtain access to and are also a very good hedge against inflation,” she said. But she added that, more fundamentally, if there were to be increased reliance on domestic demand, infrastructure and green energy would be important investments.

Liu said that much has been learned from the country’s high-speed rail project and that it would now know how to operate a Build Operate Transfer (BOT) project better than before.

Taiwan has launched a series of 12 infrastructure projects grouped under the i-Taiwan banner, with a total budget of 3.99 trillion New Taiwan dollars. According to Liu, the i-Taiwan projects and around 20 others are to be presented around Asia, the US and Europe.

“Let investors decide which are the projects that interest them the most,” she added.

FIVE major sites are coming up for redevelopment in Taipei — and the city government was in Hong Kong to meet potential investors and developers.

MIPIM Asia marked the first time that the city had travelled abroad to promote investments in this

way, according to Samantha Chang, director of CBRE Consulting Taiwan, which assisted the government to attend MIPIM Asia.

Seventy-year leases are available on the sites, two of which are close to the iconic skyscraper Taipei 101.

Another site, in the west of the city,

is adjacent to the old central business district and close to Taipei railway station, while the fourth is located in Taipei Technology Corridor’s Beitou-Shilin Tech Park.

The fifth site, known as the Xingguo project, is next to Nanjing East Road MRT station.

Photo: Peellden

Taipei unveils five prime city sites

Taipei's railway station

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••• MIPIM ASIA IN PICTURES

AROUND THE AISLES

Stands fill as delegates network

The Taiwan Pavilion

THE STANDS AND AISLES OF MIPIM ASIA’S EXHIBITION AREA ARE STILL THE FAVOURITE VENUE FOR NETWORKING. FOCUSED EVENTS SUCH AS POWER MEETINGS AND TOPIC BASED LUNCH TABLES ALSO PROVIDED PLENTY OF ACTIVITY THROUGHOUT THE THREE DAY EVENT

Getting straight to the point at the Topic-Based Lunch tables

VIP tour: The Hong Kong Government's secretary for development Carrie Lam and MIPIM Asia's Paul Zilk are briefed on the Hopewell Holdings stand

Professor Joseph Stiglitz (seated foreground, second right) was guest of honour at MIPIM Asia’s official dinner

Keynote speaker Professor Joseph Stiglitz learns more about Shanghai from Xu Ruqing, vice president of the Shanghai Huangpu Riverbanks development construction investment holdings

Koh Puos Investment Group’s stand showcased the company’s development of Morakot Island, off the Cambodian mainland

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••• NEWS - JAPAN

Prime residential property finds investors receptive INVESTORS are “more proactive” and looking to Japan in ever greater numbers, according to Mitsuo Akiyama, president of Tokyo-based One World Asset Management, which specialises in prime residential property in Japan.

Akiyama said that many more players are active in the market.

“Banks have changed their attitude to working with investors too, so it is becoming easier to work with them,” he added.

Before the financial crisis, people

were focused on commercial and office property, but have now realised that residential provides an alternative — a trend that has benefited One World, Akiyama said.

Akiyama found the mood at MIPIM Asia more upbeat than in previous years. He said he was able to “meet people that we think that we can work with — even perhaps tomorrow”.

One World Asset Management’s Mitsuo Akiyama: “Banks have changed their attitude”

TOKYO BACK IN BUSINESS WHILE aftershocks continue to shake Tokyo and Japan is still assessing the considerable human and financial cost of the earthquake and tsunami that particularly afflicted the Miyagi prefecture in March, life in the capital is already close to normal, according to Dr Leonard Meyer zu Brickwedde, presi-

dent and CEO of Kenzo Capital Corporation.

He said that trains are running normally, power is back on, foreign workers are returning and the restaurants are getting busier, while few buildings belonging to stock-exchange-listed companies and REITs were affected anyway.

Meyer expects the economy to recover in the third quarter. The biggest challenge, he said, is changing perceptions abroad, particularly following damage to the nuclear power station at Fukushima. “All the experts and scientists have concluded that there is no danger for Tokyo.”

Largo targeting Asian investors drawn to high-return assets “OUR objective in being at MIPIM Asia is to find investors who are interested in Japanese assets, especially income-producing assets,” said Haruo Yamamoto, president of the Largo Corporation.

Tokyo-based Largo, which Yamamoto established seven years ago, provides clients with services ranging from brokerage, asset management and leasing to develLargo Corporation’s Haruo Yamamoto: Looking for investors

opment and refurbishment. The company’s clients are drawn from the office, residential, commercial and industrial/logistics sectors.

Largo helped Taiwanese investors to close a deal on two commercial buildings bought for over 100bn yen in the months before MIPIM Asia. “The Taiwanese are very active in Japan,” Yamamoto added.

“They are becoming wealthier and they are coming to Japan to buy assets, so we don’t want to miss the opportunity.”

Bear Logi moves with the times A FUNDAMENTAL change has occurred in the Japanese logistics property market, with a post-downturn shift of power to the tenant, increased trade with China and a rise in the use of third-party logistics companies.

“The logistics property market is restructuring, because a lot of the existing stock of property is too small and inefficient for modern logistics,” said Matthew Zann, founder and managing director of Bear Logi.

He added that tenants’ needs have not been adequately met, with the form and location of logistics facilities often determined by investors demanding “cookie-cutter” buildings.

Zann, previously with Macquarie Goodman, founded Bear Logi in 2009. His aim is to produce logistics property that better suits tenants and is therefore a better investment.

Bear Logi’s Matthew Zann: “The logistics property market is restructuring”

Investment influx REAL-estate agent Tokyu Livable is anticipating that money from other Asian countries — notably Hong Kong, Singapore, Taiwan and Korea — will be targeting investments in Japan, according to managing executive director Toshihiko Kitagawa.

Tokyu Livable, a second-time MIPIM Asia exhibitor, is involved in a variety of projects in Japan, including office buildings, commercial resorts and hotels.

“Last year at MIPIM Asia was useful,” Kitagawa said. “We have a relationship with people that we met last time that is growing. We were able to meet them again and renew our contact with them.”

Tokyu Livable’s Toshihiko Kitagawa: Renewing contacts

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••• NEWS — KOREA

Tourism takes centre stage NAEJANG Mountain Resort and Haenam Oceano Resort were among the major tourism destinations being promoted at the Korea Pavilion.

Naejang Mountain Resort, which spans over 1.5 sq km, is located only 1 km away from public facilities in Naejang Mountain Park. The resort consists of three districts, each of which has been zoned for a different purpose. The Refresh Zone will offer space for relaxation and cultural activities; the Wellness Zone will specialise in beauty treatments and leisure activities, including a hotsprings spa; and the Multiplex Zone will feature shopping malls and outdoor theatres.

Completion of the high-speed Honam rail line in 2015 will make Naejang accessible from Seoul within 1.5 hours.

Despite evident resort potential, the Hwawon Tourism Complex has not yet been fully developed, due to its remoteness from Seoul. However, the Korean government has now formulated the South Coast Belt development plan, with the objective of invigorating an area from Mokpo to Busan. Covering 508 ha, the Haenam Oceano Resort is one of four major districts on the South Coast Belt and has been designated a ‘mega tourism complex’.

The government is improving infrastructure to increase the area’s accessibility. An airport, high-speed rail link and express highways are being built, and seaports are being enhanced.

Haenam Oceano Resort: One of four major districts on the South Coast Belt, it has been designated a ‘mega tourism complex’

Korea Pavilion opens door to wealth of opportunity THE KOREA Tourism Organization attended MIPIM Asia under the auspices of the Korean Pavilion, along with the Ministry of Culture, Sports and Tourism, the Ministry of Knowledge Economy, seven local authorities and six free economic zones (FEZs).

Among the investment opportunities being presented at the Korean Pavilion were the regions of Taean and the southwest coast, which have been designated exclusively for tourism development.

Taean is themed as a ‘future-oriented eco-city’. Both investors and operators are being sought to develop the 14.6 sq km site, which is situated on Cheonsu bay. Southwest coast projects, which will cover an area of 51.5 sq km by 2025, include hotels, a golf course, a casino and a theme park.

Saemangeum Gunsan Free Eco-

The Korean Pavilion

nomic Zone (SGFEZ) and the Haenam Oceano Resort were also featured. The SGFEZ development, which covers an area of 96 sq km, is divided into four districts: the

Saemangeum Tourism Complex, the Gogunsangun Maritime Tourist Zone, the Gunsan Residential Zone and the Gunjang National Industrial Complex.

Lift-off for Midan’s airport plans LIPPO Incheon was at MIPIM Asia to promote Midan City, a 270 ha leisure and tourism project located on Yeongjong island.

Located in one of Korea’s free economic zones (FEZs), Midan is 10 minutes away from Incheon International Airport — the 12th busiest airport in the world.

Lippo Incheon Development Company’s CEO, Joseph Chiang, described Midan as the “gateway” to the airport, which aims to handle 100 million passengers annually by 2015. Of this number, some 30 million tourists per year will “pass our front door”, he said.

Chiang added that Midan, also known as Woonbook, would also serve as a first and last stop for many

26 / M I P I M A S I A R E V I E W M AGA Z I N E 2 0 1 1

Midan City: A 270 ha leisure and tourism project located on Yeongjong island

airline staff. The planned facilities include an international school and hospital, and residential, commercial, business and entertainment facilities, including a casino.

Lippo Incheon is responsible for developing an area of 183 ha. The expected cost of the project is estimated at 5,000-6,000 bn Korean won.

The target for completion is 2014.

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••• NEWS — AUSTRALIA

Perth sets its sights on hotel investors with staying power

Perth’s lord mayor Lisa Scaffidi (left) with chairman of Tourism Western Australia Kate Lamont, Gary Prattley chair of the Western Australian Planning Commission (left) and Reed MIDEM’s Peter Rhodes

WESTERN Australia is hungry for hotel development, Lisa Scaffidi, lord mayor of state capital Perth, told a packed Agora room.

“Hotel investment is our number one reason for attending MIPIM Asia,” she said. “We are keen to do what we have to do to encourage that sort of investment. We are trying to create the right mix to get the kind of joint venture that’s going to enable that type of development in the short term.”

Scaffidi added: “As we all know, even if we got an application today it would actually be a few years before we were sleeping in those hotel beds.”

Kate Lamont, chairman of Tourism Western Australia, said that major mining, gas and petroleum projects are responsible for much of the demand. Topping the list is Chevron’s $43bn in the state’s north — the biggest single resource project in Australia.

“We are already seeing significant downstream benefits from our natural assets, all of which have a flow-on effect through the community,” Lamont said. “But where we are yet to see significant impact is in the development of short-term accommodation. To be blunt, we have a serious shortage of hotel rooms in Perth and, to a lesser extent, in regional western Australia.”

Lamont reported that the current average occupancy for hotels in Perth is just under 82% but, from Monday to Friday, that rate soars to above 95%. “That means that Perth is essentially full,” she said.

According to Lamont, conservative forecasts suggest that Perth will need an additional 3,000 hotel rooms in the next 10 years to keep pace with demand. The number of visitors to the city rose by 6.8% in 2009, she added.

Smart route to Australian assets ECHO Capital and CB Richard Ellis (CBRE) have formed a strategic alliance designed to provide property solutions for foreign buyers targeting investment opportunities Down Under.

The initiative follows new federal legislation designed to attract foreign investors to Australia by changing the tax levels on both income and capital gains. Foreign investors can now benefit from a withholding tax rate of 7.5% on both income and capital gains — significantly below the standard withholding tax rate of 30%.

The new Echo/CBRE strategic alliance — known as Managed

Investment Trust Services Australia (MITSA) — aims to provide a costeffective route for offshore buyers to acquire and manage Australian assets and obtain the new tax savings. Echo Capital will provide asset and investment management services, while CBRE will help source suitable assets and provide ongoing property services.

Speaking at the MITSA stand at MIPIM Asia, managing director, Stephen Day, said: “In introducing and amending the withholding tax rules, the Australian government is endeavouring to promote Australian fund-management competitiveness, attract further investment into

28 / M I P I M A S I A R E V I E W M AGA Z I N E 2 0 1 1

property and infrastructure, and support Australia’s aim of becoming a stronger financial hub in the Asia Pacific region.” Recent CBRE

research shows that foreign investors accounted for a hefty 42% of all commercial purchases over A$4m in the third quarter of 2010.

Strategic alliance: MITSA’s Stephen Day (right) and Stuart Dawes

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••• NEWS — RETAIL PROPERTY

New markets in fashion SHANGHAI-based fast-fashion retailer Asobio is looking to expand throughout Asia.

The company, created in 2008, currently trades from 60 stores in China, but wants to be present in Singapore, Malaysia, Indonesia, Vietnam and Cambodia.

“We are looking at a mix of mature and growing markets,” said Priscilla Sum, Asobio’s overseas business development and retail director, who was at MIPIM Asia to meet landlords and architects. The company is also looking further afield to Europe and the US. “Our expertise comes from the manufacturing side,” Sum said.

“We manufacture for international brands and this is why we have decided to open our own brand. But we need to diversify risk and diversify markets. We cannot focus only on mature markets, which can be very difficult for a new brand such as ourselves.”

Asobio is also looking for franchisees to help open up certain markets. Its shops in China are a mix of subsidiaries and franchises. Sum said that in some cities — in Mongolia, for example — aspects such as recruitment are better handled by local people. “However, the customer should not be able to tell whether a store is a franchisee or a subsidiary,” she added.

AEON shops for new partners in pan-Asian expansion drive AEON — one of Japan’s largest retailers — was at MIPIM Asia to advance its expansion into China and south-east Asia.

The group, whose activities span general merchandising, supermarkets, speciality stores, financial services and amusements, is also developing major regional shopping centres across Asia.

Aeon has operated stores in China since 1996. It now has two large regional shopping centres in Beijing and Shangdong and is planning to open more malls in China. Target areas include Beijing, Tainjin, Shangdong, Jiangsu, Guangdong, Hubei, Fujian and Zhejiang. The group is also active in Hong Kong, Thailand and Malaysia, and is aiming to expand into Vietnam, India and Indonesia.

Aeon was targeting investors, landowners and operators

At MIPIM Asia, Aeon was targeting investors, landowners and operators. “There are many things to learn and it is good to be here,” said an Aeon spokesman. “There are many investors and government organisations, and it is very use-

ful and interesting to have the opportunity to talk to them.”

With fast-fashion retailers such as H&M and Forever 21 doing well in Japan, Aeon is also looking for new foreign retailers to introduce to its home market.

Business by design

JAPANESE retail design specialist Garde, which focuses on retail, residential and hospital design, was at MIPIM Asia to meet potential new clients.

“We have succeeded in meeting people and, little by little, we are progressing,” said senior director Taka Tsukiyasu.

Garde is targeting all countries in south-east Asia, but is particularly interested in China. “Look at the numbers,” he said. “Japan has been the slowest to recover from the downturn, so we have had to look outside our home market.

Since MIPIM Asia last year, we have worked on a boutique and hotel in Shanghai, and we are also creating a concept for an Asian fashion brand.”

“The biggest change from last year is that we have a representative in Hong Kong, which is very helpful,” Tsukiyasu added.

Power for good MIPIM Asia’s new Power Meeting format was a hit with Susan Li, the Shanghai-based director of real estate expansion for German retailer Media Markt.

“It was very useful and I acquired a lot of information from different developers, owners and agencies,” she said. “In turn, I exchanged our company’s information with them.”

Because Media Markt tends to be an anchor tenant in shopping centres, Li said that it is important for the company to be involved early in the development process of any project that it will occupy, so that units are configured the right way. “We need to see things on the plan so that they are the right shape,” she added.

Garde’s Taka Tsukiyasu (right), with colleague Yasuko Ikeda

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••• NEWS - PROFESSIONAL

Green buildings find favour with occupiers, says RICS

It’s time to plug the skills gap THERE is a need to plug the sustainability skills gap among property professionals, said Dr Ann Heywood, principal of the College of Estate Management (CEM).

“The fact is that, whether it is ancient or modern, the workplace will look very different to the way it has looked in the past — and that has substantial implications for real estate and the property profession,” Heywood said.

She added that there is a need for skills-gap analysis and the ability to “identify components of learning that not only plug these gaps, but which also provide learning that is accredited and recognised on an international scale”.

UK-based CEM, which provides distance-learning packages worldwide, currently has around 4,300 students in 105 countries, and has been active in China for the past 20 years.

RICS’ Robert Peto: Energy rating can add 3% to rental value and 16% to capital value

MAJOR occupiers are taking climate change more seriously and increasingly prefer buildings that have less environmental impact, according to Robert Peto, president of the Royal Institution of Chartered Surveyors (RICS).

Speaking at a MIPIM Asia session on corporate responsibility, sustainability and valuation, Peto pointed out that the industry is

being forced to become greener by legislation, as climate change climbs the agenda of governments worldwide, as well as shareholder pressure.

But he added that any real-estate investor who does not consider the risk of obsolescence through being insufficiently green is asking for trouble. Although there is a lack of evidence regarding the impact

that improved sustainability has on values, Peto pointed to RICS research showing that energy rating can add 3% to rental value and 16% to capital value.

However, the research also indicated that there was more interest in the bottom line than in sustainability — and that the value boosts were accounted for by reduced electricity bills.

Dr Ann Heywood, CEM: Changing workplace has substantial implications for property profession

Focus on FIABCI

Hong Kong faces surveyor shortage HONG Kong is facing a shortage of construction and real-estate professionals, warned Professor Chau Kwong Wing, former president of the Hong Kong Institute of Surveyors (HKIS).

Chau, who is chair of real estate and construction at the University of Hong Kong and was president of the HKIS until December, said that the

combined effects of the initiation of 10 new infrastructure projects, the implementation of the government’s new mandatory energy-efficiency registration scheme for buildings and government policy on the revitalisation of industrial buildings have combined to create an unprecedented demand for building professionals. Combined with the

demand from mainland China, this has eroded the supply of labour.

“The shortage is not a serious problem yet, but it could be in two to three years,” Chau said. He suggested that one solution could be to allow technical grade HKIS members to move up to professional grade with appropriate training and assessment.

FIABCI Italia participated at MIPIM Asia for the first time, with new president Giancarlo Bracco present on the FIABCI stand. Also in Hong Kong were Elizabeth Davidson, president of the US’ Pacific North West chapter, and Judith Sykes, representing the Honolulu chapter.

Bracco said that MIPIM Asia had helped FIABCI Italia to develop new synergies, identify promising business opportunities, explore real-estate innovations and find out more about pioneering projects.

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••• NEWS

Altai gambles on investors PLANS for a new €667m gambling resort that will accommodate around 3,000 guests and the same number of staff were showcased at MIPIM Asia.

Siberian Coin — as the resort has been dubbed — is being promoted by the government of the Russian region of Altai, which has introduced tax incentives to attract developers.

The project will include 45 casinos along with 57 hotels, including a complex of mini hotels, five-star villa hotels and conference hotels. There will also be a five-star guesthouse complex designed in the style of a Russian village.

A range of leisure activities are also planned, including an equestrian complex, gliding and paragliding facilities, a mountain-sports centre offering alpine skiing and rock climbing, and a cinema.

The development will share the infrastructure that has already been constructed to serve a number of other tourist resorts. Together, these form the Altai Area for Tourism and Recreation.

Marina Bay Sands adds luxury resort to downtown Singapore

Hwang Yu-Ning, URA (second left): The idea is to make Marina Bay even more accessible to the visitors

THE AIM of the Singapore Pavilion at MIPIM Asia was in part to inform potential investors and developers about the progress being made at Marina Bay, the city’s 360 ha development, which has created a new downtown financial district.

Marina Bay Sands is the latest component to be completed. This integrated resort combines a hotel, a casino, a convention/exhibition centre, a shopping mall, an art and science museum, theatres, six ‘celebrity chef’ restaurants, two

floating pavilions and a 340 metrelong SkyPark.

The development also includes public realm and, according to Hwang Yu-Ning, Urban Redevelopment Authority of Singapore’s group director of physical planning, the idea is to make Marina Bay even more accessible to visitors. To this end, a place manager has been appointed for Marina Bay, tasked with organising events and activities in the area.

Meanwhile, development is not yet over for Marina Bay. Rerouting traffic by constructing substantial amounts of the new expressway underground will release a further 80 ha of land, Hwang said.

Singapore was also promoting the Jurong Gateway development, which is being built around an existing MRT station.

New tourist city rises in Vietnam Mikhail Schetinin, vice-governor of Altai Region presents the case for Siberian Coin

Housing promise Architectural firm NDA launched an initiative to develop sustainable design solutions for affordable downtown housing aimed at China’s growing middle class.

Named CITIWI – combining the word ‘city’ with ‘iwi’ the maori word meaning ‘people’ – the initiative answers the need for “a more realistic approach to market demand,” said Emmanuel Delarue, CEO of NDA. “I see affordable housing as one of – if not the most – promising sectors in China,” he said.

CANGIO Tourist City Corporation’s $1.4bn Saigon Sunbay project gets under way in the first quarter of 2011.

The development, which will create a 600 ha ‘tourist city’ on reclaimed coastal land situated 55 km south-east of Vietnam’s Ho Chi Minh City, was exhibited at MIPIM Asia. Delegates were told how the scheme, which will comprise four distinctly themed areas wrapped around a man-made lagoon, will feature 11 hotels, a 112,000 sq m resort area, villas and six-storey apartment blocks.

Cangio Tourist City Corporation is currently looking for sub-developers for the different hotel, retail, entertainment and residential elements of the development.

The architectural concept for

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Cangio Tourist City, looking for sub-developers for Saigon Sunbay

Saigon Sunbay, which is being built on the edge of a UNESCO-recognised mangrove forest, was designed by Aedas. A feasibility study was carried out by property consultant Savills.

The land reclamation phase is

scheduled to last until 2013 and overlaps with infrastructure construction. These processes alone are expected to cost $350m. Building will start in 2014, with the entire project scheduled for completion in 2018.

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••• NEWS

Chongqing makes strong case at MIPIM Asia’s sister show A major delegation from Chinese city Chongqing was among participants from ten Asian countries to attend MIPIM Asia’s sister show MIPIM, held in Cannes, France during March (2011).

Chongqing Municipal Government, exhibiting at MIPIM for the first time, gained further exposure by sponsoring the MIPIM Asian lunch, a networking opportunity for investors looking at the region and Asian companies looking for foreign participation.

Delegates heard that Chongqing is

undergoing massive redevelopment which will see the city almost double in size to 547,300 ha by 2020.

“We are the biggest city on the western side of China and so we hope to meet potential business partners at MIPIM,” said Xu Qianli, director general of the Chongqing Urban Construction Comprehensive Development Management Office, and a speaker at the conference China: Reward Versus Risk.

This was one of three sessions on the region, staged as part of Asia Day, always the first day of MIPIM.

Zou Xiaoping, chairman of the China Council for the Promotion of International Trade, Chongqing Sub-Council (CCPIT), speaking the Asian Lunch said: “Chongqing is demonstrably an area for new development in China.”

“Foreign friends” should not worry if they have missed the opportunity to develop in Pudong and other growth areas, because, said Zou, there are still major opportunities to be had in Chongqing.

MIPIM 2011 attracted 18,600 participants from 90 countries, including 4,000 investors.

Paris appeals DELEGATES attending the Invest in Paris conference session at MIPIM Asia heard persuasive reasons why Asian money in search of western real estate might find a good home in France’s capital.

Paris has not experienced excessive construction; it has 11.8 million inhabitants over an area of 12,000 sq km; it accounts for 30% of France’s GDP; and it has a strong residential property base.

But crucially, occupier demand for offices grew by 40% in 2010 — 510,000 sq m changed hands in Q3.

Asia on the up FOR CHARLES Lam, managing director, Greater China at Pramerica Real Estate Investors, the keen interest generated by the Investor Power Meetings proved that market sentiment is improving and that money is coming back to Asia. “It was very different last year,” he observed.

“The market had dried up and there was no new capital.”

First-hand facts PHIL Ellis, head of global real estate at UK-based Aviva Investors, said his objective at his first MIPIM Asia was to meet people and to find out as much as possible about the Asia Pacific region, in order to properly articulate opportunities to clients.

“Obviously, it is better to experience the market at first hand, talk to investment consultants and hear their forecasts for the region,” he said. “As a result, I now have a much better understanding of many Asian markets.”

Chongqing’s Zou Xiaoping speaking at MIPIM’s annual Asian Lunch

RCA ups Asia research coverage REAL Capital Analytics (RCA) has strengthened its real-estate information coverage of China by forming a partnership with ECommercial, sister company of China Real Estate Information Corporation (CRIC).

“This should lead to significant enhancement of our coverage of property transactions throughout

mainland China,” said Bryan Grad, senior vice-president of sales at RCA. The deal with was announced during MIPIM Asia, where RCA also announced a pact with RP Data, said to be the best provider of transactional data in Australia and New Zealand. “This will also enhance what was already good

coverage for property sales and will create what we can fairly label excellent coverage,” Grad said.

He added: “MIPIM Asia has been a wonderful three days. We have been back-to-back busy, meeting both prospective and existing clients. MIPIM Asia is the ideal way to meet dozens of key decision makers in one location.”

Aviva’s Phil Ellis: “Better understanding”

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S P E A K E R S E SS I O N S

Conferences call

MIPIM ASIA’S PACKED, VARIED AND TOPICAL CONFERENCE PROGRAMME DREW TOP LEVEL SPEAKERS AND CAPACITY AUDIENCES TO EACH OF TWO MAIN AUDITORIUMS IN A LINE-UP THAT PROVIDED INTENSE AND IN-DEPTH INSIGHTS INTO REAL ESTATE IN THE ASIA PACIFIC REGION

Vinacapital’s Don Lam (left) moderated the session on the Vietnam real estate market. Other speakers included (left to right) Aedas Vietnam’s Don Conning, Jen Capital Advisors’ Jonathan Cheng and CBRE’s Marc Townsend

Ali Al-Ghannam of the Kuwait Finance House spoke during the conference Attracting Foreign Investors: Bridging The Cultural Gap

Discussing Investment In South East Asia: Suchad Chiaranussati of Real Estate Capital Asia Partners (left), David Blackhall of Vinacapital, moderator Andrew Weir of KPMG, Kumar Tharmalingam of Malaysia Property Incorporated and Woon Pin Chong of Lend Lease Investment Management

The Meet The Architects – Super Panel featured Qi Xin of architects and engineers Qi Xin (left), Yan Meng of Urbanus Architecture and Design, Professor Winy Maas of MVRDV, Bernado Fort-Brescia of Arquitectonica and Professor Yung Ho Chang of Atelier Feichang Jianzhu. The session was moderated by PHU’s Philippe Uzzan

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••• FEATURE

P R O F E SS O R J O S E P T H S T I G L I T Z

Recovery begins at home DON’T COUNT ON THE WEST, NOBEL PRIZE-WINNING ECONOMIST PROFESSOR JOSEPH STIGLITZ, WARNED DELEGATES IN HIS MIPIM ASIA KEYNOTE. PAUL STROHM REPORTS

P

ROFESSOR Joseph Stiglitz’s pessimistic opinion of prospects for recovery in the West is counterbalanced by a more upbeat view of both the short- and long-term outlook for Asia.

This is despite the fact that the global markets remain interlinked and the fortunes of one side of the world still impact on those of the other. The question that Professor Stiglitz addressed in his MIPIM Asia keynote was how Asia can find paths to growth that do not depend on exports to the West.

Stiglitz told his capacity audience that Asia had learned from the crisis of the late Nineties, meaning that it faced the recent downturn with strong public finances. This was in stark contrast to the US and Western Europe. “In a sense, the most important reason for China’s particular success was the adoption of Keynesian policies,” Stiglitz said, explaining that providing strong stimulation for investment enhances the economy in the short term and provides a foundation for long-term growth.

“China is doing exactly the same thing now,” he added. “This is putting it on a foundation for a period of continued

“

The only source

of strong growth is likely to be here

”

in Asia

Joseph Stiglitz growth — and the whole world will benefit from this.” But Stiglitz pointed out that, in terms of GDP, Asia is too small to provide the stimulus that will turn the fortunes of the West.

If Asia is to continue to grow while Europe and the US stagnate, a change of economic model is required. Asia’s success has been based on export-led growth, but this will be hard to maintain where export markets are weak.

The good news is that, in the last few months, there has been a greater emphasis on domestic demand. Stiglitz said that real estate and green investment could also play a key role in maintaining growth.

Meanwhile, Stiglitz believes the US and Europe are set for a Japanese-style malaise: “A long period of very low growth.” He asserted that what is needed in the West is a second round of stimulus incentives. “I get asked all the time if the US can afford another round of stimulus,” he added. “My argument is that we can’t afford not to do it. Even from the budgetary point of view, we should learn the lesson from China.”

Stiglitz said that monetary policy is likely to be ineffective for the West. He also predicted that the new enthusiasm for austerity would prolong the recovery — and “beggar-thy-neighbour” currency policies would be no help either.

“What is really needed is a growth compact,” he said. Both China and the US need to increase wages and reduce inequality. The US also needs to move away from consumption and those sectors where it has lost the advantage and concentrate on repairing its dysfunctional financial sector. China, meanwhile, should move away from exports and recycle its savings in a more productive way.

Stiglitz also said that both China and the US must improve their energy efficiency and respond to the challenge of global warming. At the core of the new economic model will be the infrastructure and real-estate investment needed to “retrofit” economies, he added.

“The only source of strong growth is likely to be here in Asia,” Stiglitz concluded. “But Asia’s growth has to be based not just on more consumption.

The planet will not survive if everybody attempts to imitate the profligate US consumption style.”

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••• FEATURE

D R N I C K A X FO R D

Why second is best SECONDARY PROPERTY REPRESENTS THE OPPORTUNITY OF A LIFETIME, ACCORDING TO CB RICHARD ELLIS RESEARCH CHIEF NICK AXFORD. PAUL STROHM FINDS OUT WHY

S

KILFUL timing of investment in secondary property could provide returns “that will make people’s careers”, said Dr Nick Axford, senior managing director and head of research at CB Richard Ellis Hong Kong, in his MIPIM Asia presentation, Real Estate Investment In Our Uncertain World: Global Overview And Local Sentiment.

Axford said that the real-estate investment market is in many ways behaving contrary to what might be expected, given the underlying indicators and the outlook for Europe in particular.

What has been really surprising is the speed with which the yields index has turned around, Axford observed, pointing to the extraordinary decline in yields in the last 18 months to two years. In the case of Asia, office capital values have started to move up 10%-12% per year, although the turnover of property has not been rising as fast as values.

“The key is the huge weight of money trying to get into the real-estate market, or particular bits of the real-estate market,” Axford said, adding that it is the bond-like investment characteristics of better quality properties let to better quality tenants that are behind the

trend. “Length and quality of income stream are paramount,” he said.

Axford explained that investors are looking for well-located large liquid markets, because funds are risk averse but want a higher return than they can achieve in the bond market.

“A good, well-let investment in real estate in a good location has significant advantages,” he said. “The yield is in most cases significantly higher than those of equivalent government bonds.

And if the tenant does default, you have still got a building — a physical asset — unlike a bond.” He added that, in many cases, rents also rise with inflation.

But most of these qualities only apply to better quality properties. At the moment, the last thing investors want to do is sell better quality properties — and it is this that is pushing yields back down again.

But Axford pointed out that this only applies to top-quality investments.

“The spread between prime and secondary yields is, we think, at the highest it has been in the last 30 to 40 years and, possibly, the highest ever seen in terms of the mainstream commercial property markets, be-

36 / M I P I M A S I A R E V I E W M AGA Z I N E 2 0 1 1

“

There will be

some fantastic returns to be made

”

Nick Axford cause investors are very risk averse.”

But this could change: “For investors who time the market right, there is the opportunity to make returns that will make people’s careers. There are exceptional opportunities, not only to reposition property from secondary to prime, but to benefit from the yield decompression that will come when investors believe that recovery really is on the way.”

According to Axford, it is the current lack of belief in the recovery that is holding things back. “Once that belief starts to come back, we will see a very sharp change in the way that secondary value investments are being priced,” he said.

“That’s where the money is. At that point, there will be some fantastic returns to be made.”

Analysing when that might occur, Axford noted that vacancy rates are already starting to fall and that demand is beginning to feed through to the office and retail markets.

The best opportunities for harnessing growth from the recovery are in the Asian economies, he said , adding: “It will be very interesting to see whether Asian investors will start to exploit more of the opportunities that appear in their own region, rather than necessarily looking elsewhere in the world.”

104_FD_RV_ASIA__ 29/03/11 09:01 Page1

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••• NEWS — RETAIL PROPERTY

New markets in fashion SHANGHAI-based fast-fashion retailer Asobio is looking to expand throughout Asia.

The company, created in 2008, currently trades from 60 stores in China, but wants to be present in Singapore, Malaysia, Indonesia, Vietnam and Cambodia.

“We are looking at a mix of mature and growing markets,” said Priscilla Sum, Asobio’s overseas business development and retail director, who was at MIPIM Asia to meet landlords and architects. The company is also looking further afield to Europe and the US. “Our expertise comes from the manufacturing side,” Sum said.

“We manufacture for international brands and this is why we have decided to open our own brand. But we need to diversify risk and diversify markets. We cannot focus only on mature markets, which can be very difficult for a new brand such as ourselves.”

Asobio is also looking for franchisees to help open up certain markets. Its shops in China are a mix of subsidiaries and franchises. Sum said that in some cities — in Mongolia, for example — aspects such as recruitment are better handled by local people. “However, the customer should not be able to tell whether a store is a franchisee or a subsidiary,” she added.

AEON shops for new partners in pan-Asian expansion drive AEON — one of Japan’s largest retailers — was at MIPIM Asia to advance its expansion into China and south-east Asia.

The group, whose activities span general merchandising, supermarkets, speciality stores, financial services and amusements, is also developing major regional shopping centres across Asia.

Aeon has operated stores in China since 1996. It now has two large regional shopping centres in Beijing and Shangdong and is planning to open more malls in China. Target areas include Beijing, Tainjin, Shangdong, Jiangsu, Guangdong, Hubei, Fujian and Zhejiang. The group is also active in Hong Kong, Thailand and Malaysia, and is aiming to expand into Vietnam, India and Indonesia.

Aeon was targeting investors, landowners and operators

At MIPIM Asia, Aeon was targeting investors, landowners and operators. “There are many things to learn and it is good to be here,” said an Aeon spokesman. “There are many investors and government organisations, and it is very use-

ful and interesting to have the opportunity to talk to them.”

With fast-fashion retailers such as H&M and Forever 21 doing well in Japan, Aeon is also looking for new foreign retailers to introduce to its home market.

Business by design

JAPANESE retail design specialist Garde, which focuses on retail, residential and hospital design, was at MIPIM Asia to meet potential new clients.

“We have succeeded in meeting people and, little by little, we are progressing,” said senior director Taka Tsukiyasu.

Garde is targeting all countries in south-east Asia, but is particularly interested in China. “Look at the numbers,” he said. “Japan has been the slowest to recover from the downturn, so we have had to look outside our home market.

Since MIPIM Asia last year, we have worked on a boutique and hotel in Shanghai, and we are also creating a concept for an Asian fashion brand.”

“The biggest change from last year is that we have a representative in Hong Kong, which is very helpful,” Tsukiyasu added.

Power for good MIPIM Asia’s new Power Meeting format was a hit with Susan Li, the Shanghai-based director of real estate expansion for German retailer Media Markt.

“It was very useful and I acquired a lot of information from different developers, owners and agencies,” she said. “In turn, I exchanged our company’s information with them.”

Because Media Markt tends to be an anchor tenant in shopping centres, Li said that it is important for the company to be involved early in the development process of any project that it will occupy, so that units are configured the right way. “We need to see things on the plan so that they are the right shape,” she added.

Garde’s Taka Tsukiyasu (right), with colleague Yasuko Ikeda

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••• NEWS - PROFESSIONAL

Green buildings find favour with occupiers, says RICS

It’s time to plug the skills gap THERE is a need to plug the sustainability skills gap among property professionals, said Dr Ann Heywood, principal of the College of Estate Management (CEM).

“The fact is that, whether it is ancient or modern, the workplace will look very different to the way it has looked in the past — and that has substantial implications for real estate and the property profession,” Heywood said.

She added that there is a need for skills-gap analysis and the ability to “identify components of learning that not only plug these gaps, but which also provide learning that is accredited and recognised on an international scale”.

UK-based CEM, which provides distance-learning packages worldwide, currently has around 4,300 students in 105 countries, and has been active in China for the past 20 years.

RICS’ Robert Peto: Energy rating can add 3% to rental value and 16% to capital value

MAJOR occupiers are taking climate change more seriously and increasingly prefer buildings that have less environmental impact, according to Robert Peto, president of the Royal Institution of Chartered Surveyors (RICS).

Speaking at a MIPIM Asia session on corporate responsibility, sustainability and valuation, Peto pointed out that the industry is

being forced to become greener by legislation, as climate change climbs the agenda of governments worldwide, as well as shareholder pressure.

But he added that any real-estate investor who does not consider the risk of obsolescence through being insufficiently green is asking for trouble. Although there is a lack of evidence regarding the impact

that improved sustainability has on values, Peto pointed to RICS research showing that energy rating can add 3% to rental value and 16% to capital value.

However, the research also indicated that there was more interest in the bottom line than in sustainability — and that the value boosts were accounted for by reduced electricity bills.

Dr Ann Heywood, CEM: Changing workplace has substantial implications for property profession

Focus on FIABCI

Hong Kong faces surveyor shortage HONG Kong is facing a shortage of construction and real-estate professionals, warned Professor Chau Kwong Wing, former president of the Hong Kong Institute of Surveyors (HKIS).

Chau, who is chair of real estate and construction at the University of Hong Kong and was president of the HKIS until December, said that the

combined effects of the initiation of 10 new infrastructure projects, the implementation of the government’s new mandatory energy-efficiency registration scheme for buildings and government policy on the revitalisation of industrial buildings have combined to create an unprecedented demand for building professionals. Combined with the

demand from mainland China, this has eroded the supply of labour.

“The shortage is not a serious problem yet, but it could be in two to three years,” Chau said. He suggested that one solution could be to allow technical grade HKIS members to move up to professional grade with appropriate training and assessment.

FIABCI Italia participated at MIPIM Asia for the first time, with new president Giancarlo Bracco present on the FIABCI stand. Also in Hong Kong were Elizabeth Davidson, president of the US’ Pacific North West chapter, and Judith Sykes, representing the Honolulu chapter.

Bracco said that MIPIM Asia had helped FIABCI Italia to develop new synergies, identify promising business opportunities, explore real-estate innovations and find out more about pioneering projects.

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••• NEWS

Altai gambles on investors PLANS for a new €667m gambling resort that will accommodate around 3,000 guests and the same number of staff were showcased at MIPIM Asia.

Siberian Coin — as the resort has been dubbed — is being promoted by the government of the Russian region of Altai, which has introduced tax incentives to attract developers.

The project will include 45 casinos along with 57 hotels, including a complex of mini hotels, five-star villa hotels and conference hotels. There will also be a five-star guesthouse complex designed in the style of a Russian village.

A range of leisure activities are also planned, including an equestrian complex, gliding and paragliding facilities, a mountain-sports centre offering alpine skiing and rock climbing, and a cinema.

The development will share the infrastructure that has already been constructed to serve a number of other tourist resorts. Together, these form the Altai Area for Tourism and Recreation.

Marina Bay Sands adds luxury resort to downtown Singapore

Hwang Yu-Ning, URA (second left): The idea is to make Marina Bay even more accessible to the visitors

THE AIM of the Singapore Pavilion at MIPIM Asia was in part to inform potential investors and developers about the progress being made at Marina Bay, the city’s 360 ha development, which has created a new downtown financial district.

Marina Bay Sands is the latest component to be completed. This integrated resort combines a hotel, a casino, a convention/exhibition centre, a shopping mall, an art and science museum, theatres, six ‘celebrity chef’ restaurants, two

floating pavilions and a 340 metrelong SkyPark.

The development also includes public realm and, according to Hwang Yu-Ning, Urban Redevelopment Authority of Singapore’s group director of physical planning, the idea is to make Marina Bay even more accessible to visitors. To this end, a place manager has been appointed for Marina Bay, tasked with organising events and activities in the area.

Meanwhile, development is not yet over for Marina Bay. Rerouting traffic by constructing substantial amounts of the new expressway underground will release a further 80 ha of land, Hwang said.

Singapore was also promoting the Jurong Gateway development, which is being built around an existing MRT station.

New tourist city rises in Vietnam Mikhail Schetinin, vice-governor of Altai Region presents the case for Siberian Coin

Housing promise Architectural firm NDA launched an initiative to develop sustainable design solutions for affordable downtown housing aimed at China’s growing middle class.

Named CITIWI – combining the word ‘city’ with ‘iwi’ the maori word meaning ‘people’ – the initiative answers the need for “a more realistic approach to market demand,” said Emmanuel Delarue, CEO of NDA. “I see affordable housing as one of – if not the most – promising sectors in China,” he said.

CANGIO Tourist City Corporation’s $1.4bn Saigon Sunbay project gets under way in the first quarter of 2011.

The development, which will create a 600 ha ‘tourist city’ on reclaimed coastal land situated 55 km south-east of Vietnam’s Ho Chi Minh City, was exhibited at MIPIM Asia. Delegates were told how the scheme, which will comprise four distinctly themed areas wrapped around a man-made lagoon, will feature 11 hotels, a 112,000 sq m resort area, villas and six-storey apartment blocks.

Cangio Tourist City Corporation is currently looking for sub-developers for the different hotel, retail, entertainment and residential elements of the development.

The architectural concept for

32 / M I P I M A S I A R E V I E W M AGA Z I N E 2 0 1 1

Cangio Tourist City, looking for sub-developers for Saigon Sunbay

Saigon Sunbay, which is being built on the edge of a UNESCO-recognised mangrove forest, was designed by Aedas. A feasibility study was carried out by property consultant Savills.

The land reclamation phase is

scheduled to last until 2013 and overlaps with infrastructure construction. These processes alone are expected to cost $350m. Building will start in 2014, with the entire project scheduled for completion in 2018.

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••• NEWS

Chongqing makes strong case at MIPIM Asia’s sister show A major delegation from Chinese city Chongqing was among participants from ten Asian countries to attend MIPIM Asia’s sister show MIPIM, held in Cannes, France during March (2011).

Chongqing Municipal Government, exhibiting at MIPIM for the first time, gained further exposure by sponsoring the MIPIM Asian lunch, a networking opportunity for investors looking at the region and Asian companies looking for foreign participation.

Delegates heard that Chongqing is

undergoing massive redevelopment which will see the city almost double in size to 547,300 ha by 2020.

“We are the biggest city on the western side of China and so we hope to meet potential business partners at MIPIM,” said Xu Qianli, director general of the Chongqing Urban Construction Comprehensive Development Management Office, and a speaker at the conference China: Reward Versus Risk.

This was one of three sessions on the region, staged as part of Asia Day, always the first day of MIPIM.

Zou Xiaoping, chairman of the China Council for the Promotion of International Trade, Chongqing Sub-Council (CCPIT), speaking the Asian Lunch said: “Chongqing is demonstrably an area for new development in China.”

“Foreign friends” should not worry if they have missed the opportunity to develop in Pudong and other growth areas, because, said Zou, there are still major opportunities to be had in Chongqing.

MIPIM 2011 attracted 18,600 participants from 90 countries, including 4,000 investors.

Paris appeals DELEGATES attending the Invest in Paris conference session at MIPIM Asia heard persuasive reasons why Asian money in search of western real estate might find a good home in France’s capital.

Paris has not experienced excessive construction; it has 11.8 million inhabitants over an area of 12,000 sq km; it accounts for 30% of France’s GDP; and it has a strong residential property base.

But crucially, occupier demand for offices grew by 40% in 2010 — 510,000 sq m changed hands in Q3.

Asia on the up FOR CHARLES Lam, managing director, Greater China at Pramerica Real Estate Investors, the keen interest generated by the Investor Power Meetings proved that market sentiment is improving and that money is coming back to Asia. “It was very different last year,” he observed.

“The market had dried up and there was no new capital.”

First-hand facts PHIL Ellis, head of global real estate at UK-based Aviva Investors, said his objective at his first MIPIM Asia was to meet people and to find out as much as possible about the Asia Pacific region, in order to properly articulate opportunities to clients.

“Obviously, it is better to experience the market at first hand, talk to investment consultants and hear their forecasts for the region,” he said. “As a result, I now have a much better understanding of many Asian markets.”

Chongqing’s Zou Xiaoping speaking at MIPIM’s annual Asian Lunch

RCA ups Asia research coverage REAL Capital Analytics (RCA) has strengthened its real-estate information coverage of China by forming a partnership with ECommercial, sister company of China Real Estate Information Corporation (CRIC).

“This should lead to significant enhancement of our coverage of property transactions throughout

mainland China,” said Bryan Grad, senior vice-president of sales at RCA. The deal with was announced during MIPIM Asia, where RCA also announced a pact with RP Data, said to be the best provider of transactional data in Australia and New Zealand. “This will also enhance what was already good

coverage for property sales and will create what we can fairly label excellent coverage,” Grad said.

He added: “MIPIM Asia has been a wonderful three days. We have been back-to-back busy, meeting both prospective and existing clients. MIPIM Asia is the ideal way to meet dozens of key decision makers in one location.”

Aviva’s Phil Ellis: “Better understanding”

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S P E A K E R S E SS I O N S

Conferences call

MIPIM ASIA’S PACKED, VARIED AND TOPICAL CONFERENCE PROGRAMME DREW TOP LEVEL SPEAKERS AND CAPACITY AUDIENCES TO EACH OF TWO MAIN AUDITORIUMS IN A LINE-UP THAT PROVIDED INTENSE AND IN-DEPTH INSIGHTS INTO REAL ESTATE IN THE ASIA PACIFIC REGION

Vinacapital’s Don Lam (left) moderated the session on the Vietnam real estate market. Other speakers included (left to right) Aedas Vietnam’s Don Conning, Jen Capital Advisors’ Jonathan Cheng and CBRE’s Marc Townsend

Ali Al-Ghannam of the Kuwait Finance House spoke during the conference Attracting Foreign Investors: Bridging The Cultural Gap

Discussing Investment In South East Asia: Suchad Chiaranussati of Real Estate Capital Asia Partners (left), David Blackhall of Vinacapital, moderator Andrew Weir of KPMG, Kumar Tharmalingam of Malaysia Property Incorporated and Woon Pin Chong of Lend Lease Investment Management

The Meet The Architects – Super Panel featured Qi Xin of architects and engineers Qi Xin (left), Yan Meng of Urbanus Architecture and Design, Professor Winy Maas of MVRDV, Bernado Fort-Brescia of Arquitectonica and Professor Yung Ho Chang of Atelier Feichang Jianzhu. The session was moderated by PHU’s Philippe Uzzan

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••• FEATURE

P R O F E SS O R J O S E P T H S T I G L I T Z

Recovery begins at home DON’T COUNT ON THE WEST, NOBEL PRIZE-WINNING ECONOMIST PROFESSOR JOSEPH STIGLITZ, WARNED DELEGATES IN HIS MIPIM ASIA KEYNOTE. PAUL STROHM REPORTS

P

ROFESSOR Joseph Stiglitz’s pessimistic opinion of prospects for recovery in the West is counterbalanced by a more upbeat view of both the short- and long-term outlook for Asia.

This is despite the fact that the global markets remain interlinked and the fortunes of one side of the world still impact on those of the other. The question that Professor Stiglitz addressed in his MIPIM Asia keynote was how Asia can find paths to growth that do not depend on exports to the West.

Stiglitz told his capacity audience that Asia had learned from the crisis of the late Nineties, meaning that it faced the recent downturn with strong public finances. This was in stark contrast to the US and Western Europe. “In a sense, the most important reason for China’s particular success was the adoption of Keynesian policies,” Stiglitz said, explaining that providing strong stimulation for investment enhances the economy in the short term and provides a foundation for long-term growth.

“China is doing exactly the same thing now,” he added. “This is putting it on a foundation for a period of continued

“

The only source

of strong growth is likely to be here

”

in Asia

Joseph Stiglitz growth — and the whole world will benefit from this.” But Stiglitz pointed out that, in terms of GDP, Asia is too small to provide the stimulus that will turn the fortunes of the West.

If Asia is to continue to grow while Europe and the US stagnate, a change of economic model is required. Asia’s success has been based on export-led growth, but this will be hard to maintain where export markets are weak.

The good news is that, in the last few months, there has been a greater emphasis on domestic demand. Stiglitz said that real estate and green investment could also play a key role in maintaining growth.

Meanwhile, Stiglitz believes the US and Europe are set for a Japanese-style malaise: “A long period of very low growth.” He asserted that what is needed in the West is a second round of stimulus incentives. “I get asked all the time if the US can afford another round of stimulus,” he added. “My argument is that we can’t afford not to do it. Even from the budgetary point of view, we should learn the lesson from China.”

Stiglitz said that monetary policy is likely to be ineffective for the West. He also predicted that the new enthusiasm for austerity would prolong the recovery — and “beggar-thy-neighbour” currency policies would be no help either.

“What is really needed is a growth compact,” he said. Both China and the US need to increase wages and reduce inequality. The US also needs to move away from consumption and those sectors where it has lost the advantage and concentrate on repairing its dysfunctional financial sector. China, meanwhile, should move away from exports and recycle its savings in a more productive way.

Stiglitz also said that both China and the US must improve their energy efficiency and respond to the challenge of global warming. At the core of the new economic model will be the infrastructure and real-estate investment needed to “retrofit” economies, he added.

“The only source of strong growth is likely to be here in Asia,” Stiglitz concluded. “But Asia’s growth has to be based not just on more consumption.

The planet will not survive if everybody attempts to imitate the profligate US consumption style.”

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••• FEATURE

D R N I C K A X FO R D

Why second is best SECONDARY PROPERTY REPRESENTS THE OPPORTUNITY OF A LIFETIME, ACCORDING TO CB RICHARD ELLIS RESEARCH CHIEF NICK AXFORD. PAUL STROHM FINDS OUT WHY

S

KILFUL timing of investment in secondary property could provide returns “that will make people’s careers”, said Dr Nick Axford, senior managing director and head of research at CB Richard Ellis Hong Kong, in his MIPIM Asia presentation, Real Estate Investment In Our Uncertain World: Global Overview And Local Sentiment.

Axford said that the real-estate investment market is in many ways behaving contrary to what might be expected, given the underlying indicators and the outlook for Europe in particular.

What has been really surprising is the speed with which the yields index has turned around, Axford observed, pointing to the extraordinary decline in yields in the last 18 months to two years. In the case of Asia, office capital values have started to move up 10%-12% per year, although the turnover of property has not been rising as fast as values.

“The key is the huge weight of money trying to get into the real-estate market, or particular bits of the real-estate market,” Axford said, adding that it is the bond-like investment characteristics of better quality properties let to better quality tenants that are behind the

trend. “Length and quality of income stream are paramount,” he said.

Axford explained that investors are looking for well-located large liquid markets, because funds are risk averse but want a higher return than they can achieve in the bond market.

“A good, well-let investment in real estate in a good location has significant advantages,” he said. “The yield is in most cases significantly higher than those of equivalent government bonds.

And if the tenant does default, you have still got a building — a physical asset — unlike a bond.” He added that, in many cases, rents also rise with inflation.

But most of these qualities only apply to better quality properties. At the moment, the last thing investors want to do is sell better quality properties — and it is this that is pushing yields back down again.

But Axford pointed out that this only applies to top-quality investments.

“The spread between prime and secondary yields is, we think, at the highest it has been in the last 30 to 40 years and, possibly, the highest ever seen in terms of the mainstream commercial property markets, be-

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“

There will be

some fantastic returns to be made

”

Nick Axford cause investors are very risk averse.”

But this could change: “For investors who time the market right, there is the opportunity to make returns that will make people’s careers. There are exceptional opportunities, not only to reposition property from secondary to prime, but to benefit from the yield decompression that will come when investors believe that recovery really is on the way.”

According to Axford, it is the current lack of belief in the recovery that is holding things back. “Once that belief starts to come back, we will see a very sharp change in the way that secondary value investments are being priced,” he said.

“That’s where the money is. At that point, there will be some fantastic returns to be made.”

Analysing when that might occur, Axford noted that vacancy rates are already starting to fall and that demand is beginning to feed through to the office and retail markets.

The best opportunities for harnessing growth from the recovery are in the Asian economies, he said , adding: “It will be very interesting to see whether Asian investors will start to exploit more of the opportunities that appear in their own region, rather than necessarily looking elsewhere in the world.”

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••• FEATURE

KEEPING IT GREEN

Green and grateful PROPERTY INVESTMENTS CAN BE BOTH ENVIRONMENTALLY AND ECONOMICALLY SUSTAINABLE, A MIPIM ASIA CONFERENCE HEARD. PAUL STROHM REPORTS

I

F OFFICE buildings were designed so that the air-conditioning systems shared the floor voids with cabling as conduits for chilled air, ceiling voids could be dispensed with, buildings could be shorter and, crucially, less material would be required for construction.

This is the contention of Glan Blake Thomas, managing director of Hong Kong-based AET Flexible Space, who spoke at the MIPIM Asia conference, Keeping It Green And Sustainable At The Bottom Line. And it is not merely a theoretical proposition. AET was involved in Cheung Kong Holdings and Land Development Corporation’s 87storey The Center, built in Central, Hong Kong. Reducing the slab-to-slab height reduced the overall height of the building by the equivalent of 10 storeys.

If the technique had been used on the 9,800 buildings over 10 storeys developed in Shanghai, “they could have had 980 buildings free of charge”, Blake Thomas said. “Build 10, get one free — not a bad idea.”

But Blake Thomas said that it is not just a question of cost and materials. “The issue is the trucks that have to deliver the material, the ships that have to bring the material, the mining processes needed to make the material and the energy needed in each of those phases.”

He added that the world is consuming this embodied energy quicker than it can be produced: “As a human race, we have got to start thinking about the future. We have to use less stuff. We can’t continue the way we have been continuing for the last 50 years.”

Michael Wiener, principal and director of Gensler, said the mixture of measures employed in the Shanghai

AET Flexible Space’s Glan Blake Thomas: “As a human race, we have to start thinking about the future"

“

Build 10, get

one free — not a bad idea

”

Glan Blake Thomas Centre in the Pudong district would reduce operating costs by 30% on an equivalent building, saving 15.6 million renminbi per year. He added that 24% less steel is being used in the Shanghai Centre’s construction, saving a further $15m. The building will also use 45 million kg less of carbon each year and 45% less water.

Yu-Ning Hwang, group director of physical planning at Singapore’s Urban Redevelopment Authority, explained how a more sustainable district could be achieved by massing a development around an MRT interchange station. She pointed to Singapore’s Jurong Gateway development in the Jurong Lake district, which will harness the ability of people to commute by creating a

high-density development around the station. Orientation and massing of buildings has also been used to reduce heat gain, Hwang said.

Meanwhile, Taipei County is aiming for wide-area sustainability — not just for its own sake, but to “try to build an environment where people want to invest because they can make a profit and attract employees”, according to Chou His-Wei, magistrate at Taipei County Government.

“Taipei County was seriously polluted five years ago, Chou said, explaining that its air, rivers and environment were all tainted. “Our mission is to clean the city,” he added.

In this context, he cited a former garbage dump, which has been transformed into a man-made wetland whose reed beds help to filter the sewage of a population of 750,000 at a fraction of the cost of regular sewage treatment.

Much has already been achieved in cleaning up the rivers and the next stage is to reduce carbon emissions.

But Chou said a fundamental part of the strategy is to educate people to use less energy and water.

Chou His-Wei, magistrate at Taipei County Government: “Our mission is to clean the city”

URA’s Yu-Ning Hwang: Jurong Gateway will harness the ability of people to commute

Gensler’s Michael Wiener: “24% less steel is being used in the Shanghai Centre’s construction”

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