Bejing Hopes to Avoid Post-Game Dive?
- Mar 01, 2008
Will Beijing experience the “Barcelona Effect,” like the Spanish city that had costs overruns after 1992 Olympic Games, but recovered quickly through increased tourism and investment? Or will it experience the “Montreal Effect,” like the Canadian city that had cost overruns after the 1976 Olympic Games and took 30 years to pay off the debt? “We see neither effect in Beijing,” said Michael Thompson, CEO of Cushman & Wakefield Asia Pacific, noting that although the $36 billion price tag of the Beijing Games are more expensive compared to previous games, much of the money is going to infrastructure needed for Beijing’s long-term development as an emerging market. “These infrastructure improvements will add (to the) continued strength of the real estate sectors.” Overall, Beijing is a much different market than past Olympic host cities like Barcelona, Atlanta, Sydney and Athens. Chris Brooke, president & CEO of CB Richard Ellis Inc.’s Greater China office, said that the drivers of growth relate to the rapid economic development of Beijing and China as a whole, and the benefits associated with the Olympics are likely to be relatively minor when compared to the influence of this economic development. Additionally, there is already very strong domestic demand propelling the real estate sector in Beijing. Compared to other commercial real estate markets of past Olympic Games hosts, the outlook for Beijing post-Olympics is promising. There will be a necessary absorption period for the massive amount of new supply delivered in 2007 and 2008, but overall demand is strong and the office and retail markets are expected to return to typical rental and occupancy levels by 2010 or 2011, noted David Hand, managing director & head of China retail for Jones Lang LaSalle Inc.’s Beijing office “The demand drivers behind Beijing’s real estate growth are already extensive, and they are anticipated to continue to grow moving forward,” he said, pointing to a rapidly expanding professional services sector driving office demand and quickly growing disposable incomes and consumerism fueling retail demand. “Unlike more developed mature markets in previous host sites such as Sydney and Atlanta, Beijing is still emerging,” Hand continued, noting that although there will some short term impacts as a result of the supply boom in 2007 and 2008, the overall outlook for the both the retail and office sectors is bright.