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Xu Jiajun, CEO of Gemdale Properties and Investment: “Commercial real estate will highlight Chinese real estate in the next decade.”

2013-12-12 Source:  Size:TTT
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[Abstract] “As China's economic growth mode transforms to a consumption pattern, China has got the thriving commercial development as well. The number and area of domestic shopping centers are rapidly expanding at a rate of about 10% annually. Commercial real estate will highlight Chinese real estate in the next decade.” Xu Jiajun, CEO of Gemdale Properties and Investment, said.

  From several times of the capital movements this year, it is not so difficult to see that Gemdale Corporation is accelerating the pace of development of its commercial platform-- Gemdale Properties and Investment. The acceleration is sure to be closely related with the factor that Gemdales focusing on commercial real estate in the future will have a larger space for development.
   
  Xu Jiajun, the Chief Executive Officer of Gemdale Properties and Investment, accepted an interview with the reporter. “As Chinas economic growth mode transforms to a consumption pattern, China has got the thriving commercial development as well. The number and area of domestic shopping centers are rapidly expanding at a rate of about 10% annually. Commercial real estate will highlight Chinese real estate in the next decade.” Xu said.

  Xu believes that commercial real estate will highlight Chinese real estate in the next decade.

  With the advance of the process of taking commercial real estate as one of the two-wing strategy, if Gemdale Properties and Investment, as the platform to run the investment, development as well as operation and management independently, wants to better match the development of the overall strategy, the operational strategy under the current background will be more significant.
 
  In this regard, Xu reveals that Gemdale will steadily promote the development of commercial real estate project according to market changes and company strategy mainly focusing on opportunities of investment in first-tier and second-tier cities. City complex in core area will be the main property type for development in the medium and long term. Gemdale will still keep developing boutique residential business in the short term. Only by taking a larger development as Gemdales first priority can it continue to achieve a stronger growth. Growing large and strong is the core concept of Gemdale development. 

  Gemdale Properties and Investment possesses the Beijing Gemdale Center, Shenzhen Gangxia Project, Xi’an Gemdale Center, Shaoxing Gemdale Free Park, Vision Shenzhen Business Park and many other commercial projects. Meanwhile, through acquisition and injecting the high-quality residential projects of Gemdale Corporation, Gemdale Properties and Investment has possessed 9 boutique residential projects in Beijing, Shanghai and other cities.

  The on-going commercial project is the Beijing Gemdale Center Project which is located in CBD of Beijing with the floor area of 110,000 square meters for office space, 30,000 square meters for fashionable shopping center and 200,000 square meters for international residence. According to Xu, the rent rate of Beijing Gemdale Center had reached 100% with the daily average people’s flow reaching 30,000 and the rental income is increasing gradually. In addition, the Phase I and Phase II of Vision Shenzhen Business Park has almost rent out, which is the representative project of the core section in Nanshan judging either from the aspect of rental income or the management quality. 

  The Shenyang Binhe International, Xi’an Art Wonderland, Shanghai Fantastic Age, Shanghai Songjiang Free City, Shenyang Art Wonderland and other residential projects of Gemdale Properties and Investment are open and on sale in 2013 successively and will inject strong power into Gemdale Properties and Investment to realize the rapid development as these projects enter sales period and settlement period. 

  A transcript of interview by the report with Mr. Xu Jiajun, the chief executive officer of Gemdale Properties and Investment, is as follows.

 Reporter: Chinese commercial real estate is just on its early stage and in the process of accelerated development. How long will this stage last? To adapt to and develop the market, what the orientation and business strategy will Gemdale choose in the current environment?

  Xu Jiajun:

  As the urbanization has been referred to a strategic height of nation, new types of urbanization will be the countrys goal of focusing on promoting economic development in the next few years. For now, China is entering the medium term of the urbanization process and early stage of household consumption economy. As Chinese economic growth mode transforms to a consumption pattern, China has achieved the thriving commercial development as well. The number and area of domestic shopping centers are rapidly expanding at a rate of about 10% annually. It is estimated that by 2015 China will have 4075 shopping centers, with the total area reaching up to about 165 million square meters. In view of the development of commercial real estate in the developed countries, per-capita commercial area in China still has large space for further improvement. Commercial real estate will highlight Chinese real estate in the next decade.
  
  The national regulation policy of residence continues to operate at present, but the commercial real estate development has a relatively stable and liberal policy environment on the other hand. Besides, three factors-- local governments preference for property holding, policy gradually tilting toward the commercial real estate development as well as first-tier cities coming into a renewal of urban development stage-- will expand more space for commercial projects. 

  Under the circumstances, Gemdale has put forward “a system with two wings" development strategy since 2010. As one strategy of these two wings, commercial property based on the brand strengths and high-quality sources of Gemdale Corporation relies on improving the land value through commercial operation to enhance the premium level of the commercial products. Meanwhile, we have also realized that the long-period commercial projects as well as the high requirements for the running ability of the capital will propose much higher standards to the business scope, the strength as well as the operational ability of the enterprises.
  
  Based on the above judgment, Gemdale Properties and Investment has chosen to be the boutique business developer and take it as the strategic concept for their development strategy. In short term, they will conduct the strategies of focusing on the products line of possessing type and sales type at the same time, and rely on the current product line for the residential project to accelerate the development speed of the project, realize the sales revenue immediately and achieve the scope extension of Gemdale Properties and Investment. Meanwhile, the landmark of the industry could be formed by strengthening the cultivating of the core competitiveness of business operation and holding the high-quality commercial project of one or two core districts of the core cities. From the long term, Gemdale Properties and Investment will grow to a middle-sized national complex and boutique business holder with the obvious competitive strength as well as the ranking-top development ability and possess a relatively strong management and operation ability of properties.

  Reporter: In recent years, many of the cities have planned to develop the large complex and other commercial projects. Will you worry about the appearance of the bubble and homogenization? Which kind of commercial project can be called as the good project?

  Xu Jiajun:

  With the increasing amount of the commercial project development in China, the phenomena of complex project’s centralized appearing can be found in some cities. Does this mean that there will be bubble existing in the commercial projects in China? We think that the total amount of the commercial property is not surplus, but for the situation of uneven layout, it did exist. At present, the retail area per capita in China is not large, thus from the medium and long term, the commercial properties is not surplus. However, the development and supply amount of the commercial properties in some cities of China is over centralized, and it can not match the support of the consuming ability and the economic development of the cities, which will be likely to cause the regional surplus.

  In addition, the commercial real estate in China is still at the early stage and there is a certain gap compared with the commercial development in the developed countries and its form is too monotonous and lack of innovation. At present, the commercial projects in China have not reached the level of developed countries, and the excellent projects are rare. With the advance of the urbanization, the overall development of commercial real estate still exists vast opportunities due to the large distance between the market supply and the business demands.

  The challenge from the commercial real estate to the real estate enterprises is more relying on the ability of capital operation as well as project management and operation. The operation and management of the commercial project requires higher standards than the development of residence. A good commercial project can not only improve its own value but also drive the value appreciation to the surrounding lands as well as develop city infrastructures significantly, which can enhance the value and awareness of the city.

KeyWord:Commercial real estate, business development, shopping center
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