From Beijing to Chengdu: Part III - Construction

Although Chengdu and Beijing are developing differently, and at different rates, construction has lead to positive and negative affects on both cities. The impact of development can be seen from every twist, and viewpoint the two cities has to offer. In this second series of discussions, our team will discuss the varying levels the degree to which development has affected investment, opportunities, and lifestyles.

Real Estate and its Implications

Bates: The residential and commercial high-rise real estate market in Chengdu is booming. The market value of office space grew 17% Y/Y through 2006 which provided a rental yield of 13% per annum; more than Beijing, Shanghai, or Guangzhou . However, the luxury residential market demand exceeds commercial space due to the recent emphasis to construct tall buildings with greater density.

Dietz: The commercial real estate market is booming as well, but with some consequences.

Many international firms have established main offices here but either have little need to completely staff the offices, or cannot effectively manage the logistics. As a result a whole new market has opened up for property management of foreign corporations operating in Beijing. Additionally, the local authorities are trying to calm the hot real estate market, fearing a pop in the bubble.

High-Rise Construction
	Beijing	Chengdu
Completed	848	127
Under Construction	66	39
Proposed	10	1
Never Built	2	1
On Hold		1

Bates: Chengdu is planning 5 subway lines totaling 220 km. The first 15 km phase of the 17 station line began construction in 2001; total rail investment exceeds $1.718 billion. In May of this year, the main body construction of the deepest underground subway station was completed. This alternative transportation will help ease the increasingly congested roads.

Dietz: Similarly, in order to gear up for the Olympics and ease a huge deal of city congestion, Beijing has begun a massive subway construction project, adding an additional 5 lines to the existent three. Currently, the city has Line 1 (runs east to west under Jianguomen St., and under Tiananmen), Line 2 (a square route running around the 2nd ring road), and Line 13 (a massive loop around the north end of the city). However, the existent lines are grossly inadequate to meet the commuting demands of the city (as evident by my very intimate morning encounters with Beijing residents sardine packed into subway cars).

Bates: Of course all this development in Chengdu has caused many traffic flow implications. Many directional streets here shift one way or the other depending whether or not construction is hindering traffic. With many combined cyclists/pedestrians, the flow of traffic swells and contracts perfectly like a school of fish in a hurry. It is remarkable however, that Chengdu's resident's constantly adapt (and even manage to flourish) their way of life to meet tomorrow’s needs.

Dietz: Beijing streets run according to a different set of rules, or more accurately, a general disregard for them. The massive construction projects (including the subway lines) have forced traffic to bend and flow across the improvised routes. The roads are jammed pack with bikes, buses, and an ever increasing number of personal cars.

A common sight in most Chinese cities is a skyline littered with construction cranes (estimates range from 30-60% of the world's cranes are in use here). The face of most cities have been redefined in the past ten years, and most likely, will continue to change rapidly for some time to come.