Pudong zone undaunted by slump in real estate market
SHANGHAI Hongqiao Economic and Technological Development Zone is shrugging off the slowdown in Shanghai's real estate market despite the 3.2 million sq ft of floor space it expects to have on stream in the next three years.
The Shanghai Hongqiao Economic and Technological Development Zone United Development Co, the developer of the zone whose only investments are in real estate projects, believes the zone's role as a foreign trade centre will see it over difficult times.
'Our function is becoming more obvious these days,' company president Kong Qingzhong said.
To complement the role, the zone has floor space of 538,200 to 645,840 sq ft allocated to foreign consulates.
Mr Kong said five countries, including Australia, Japan and the United States, had signed on to base their consulates in the zone.
He said the zone would ultimately have 16.1 million sq ft of gross floor area, of which 6.4 million sq ft were already in use.
Office buildings to be completed next year included the 505,908 sq ft Foreign Trade Mansion, the 398,268 sq ft Super Ocean Mansion, the one million sq ft Maxdo Mansion and the 861,120 sq ft Tianyu Centre.
With numerous new office buildings expected to be completed between now and 1997, Mr Kong remains unruffled.
'An oversupply could materialise but we are talking about the year 2000 when Shanghai becomes the financial centre, then the supply will be a small figure [in that perspective],' he said.
Analysts predicted that 3.7 million sq ft of new office space would come on stream in the next two years, of which 40 per cent would be in the Pudong new area.
Pudong's Lujiazui Finance and Trade Development Zone has been designated the 'dragon head' of economic development in the Yangtze River delta.
But Mr Kong said the zone would not put pressure on Hongqiao because Shanghai was to develop comprehensively as a city.
After 10 years and with two-thirds of the zone already developed and fully functioning, Mr Kong said the zone was now a pillar for nearby developing districts - Gubei and Changning - to lean against.
He said land lease rates in the zone had been raised from US$37 per square foot to $56. Rents for office space went up from 0.08 of a cent per square foot a day to 0.19 of a cent.
A question remains over what happens once all the land has been developed.
'Our aim is to fully realise our role as a foreign trade centre and expand to develop our own assets [outside Shanghai],' Mr Kong said.
One such development was to establish another Friendship Shopping Centre in Suzhou, he said.
He said they wanted to bring the same retail concept from Hongqiao to Suzhou, Jiangsu province.
The company has invested 6.5 million yuan (about HK$6.04 million) in the six-storey 86,112 sq ft shopping centre.