Author: Frank Ma
JLL’s recently launched report on Xi’an in western China highlights the city’s strong real estate potential. Benefiting from China’s ‘Go West’ policy, Xi’an, as one of the region’s core cities, has undergone rapid economic development. Between 2000 and 2012, Xi’an’s economy grew by a phenomenal 18% per year, one of the fastest expanding cities in the world, and significantly, about three percentage points higher than the China national average. Moreover, economic forecasts point to Xi’an consistently maintaining double-digit GDP growth over the next few years.
Tremendous business opportunities in the city have attracted investments from MNCs, especially from high-tech industries. Xi’an has an outstanding reputation for the quality and extent of its education and research, and the city’s solid fundamentals have enabled it to transform from a traditional industrial base to a high-value-added and sophisticated manufacturing production base. Many high-tech giants, such as IBM, Intel and Huawei, have already invested in the city.
The quick expansion of the economy has resulted in strong demand for quality real estate assets. However, Xi’an is still under-developed and lacks high quality property. By way of example, there is basically no vacant space in Xi’an’s major business park – as a result, IT firms are having to consider expansion into Grade B office buildings.
As with most cities in China, new supply is concentrated in the city’s emerging sub-markets. In Xi’an, due to limited land being available for development in the traditional city centre, the emerging sub-markets are located on the fringes of the city, such as the southern part of the High-tech Zone and City North. To ease the overcrowded condition of mature sub-markets and to accelerate decentralisation, the municipal government has invested huge amounts in infrastructure and facilities to improve the accessibility of emerging areas. We are convinced that the development of new business sub-markets will enlarge the city’s capacity and further strengthen Xi’an’s leading position as an economic centre in western China. It is certainly a city to watch!