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Just 20 pct of Mainland companies mull expansion to the city

Macau is perceived as a less interesting place for corporate real estate portfolio expansion than first and second tier cities in Mainland China for the next three years

Around 21 per cent of the companies operating in Mainland China forecast that in three years their real estate portfolio will include Hong Kong, Macau or Taiwan, according to the Jones Lang La Salle (JLL) China Corporate Real Estate Trends 2015 survey. The JLL survey is focused on corporate real estate, which typically includes headquarters and the number of branch offices, and gathered answers from 544 executives leading the corporate real estate departments of 350 companies across 36 countries. The companies were divided into three categories: global, which includes all those inside and outside the PRC; all of China; domestic and foreign multinational companies represented on the Mainland; and China Domestic – Chinese national companies. The findings of the study show that for global and Chinese firms, first and second tier cities on the Mainland are perceived as more likely targets for expansion of the portfolio of companies rather than Macau or Hong Kong. When it comes to portfolio expansion, the base of the survey was shortened to 207 of which only 34 were operating in China. The number of answers from company executives represented on the Mainland amounted to 12, while representatives of national Mainland companies totalled 22. This means that of 34 companies (100 per cent) on the Mainland, only 7 (21 per cent) predict an expansion into Hong Kong, Macau or Taiwan within the next three years. The number is less significant when only domestic Chinese companies are taken into consideration. Of 22 executives surveyed, only 5 said they see the property portfolio of their corporations embracing Hong Kong, Macau or Taiwan. In terms of all the companies, including those without operations in China, 54 (26 per cent) of 207 expressed their faith in moving to the three territories. First tier cities more appealing The study demonstrates that Mainland first tier cities are the most appealing for companies. Of 207 corporations, 70 per cent expect their companies’ property portfolio to expand to these cities. The trend is the same for Mainland companies (82 per cent) and for all companies operating in China (76 per cent). Second tier cities are also likely candidates for corporate real estate expansion but to a lower degree. Of the 207 answers, 48 per cent pointed to such cities as logical places to expand. The answers were narrowed to 41 per cent for companies operating in China and to 18 per cent in terms of Chinese corporations. As for third tier cities, 38 per cent of companies in China and 32 per cent of Chinese firms expect to see an expansion in those cities. In terms of global companies, only 14 per cent expect to move into China’s third tier cities. China Corporate Real Estate Trends 2015 survey emphasises the optimistic feeling of companies on the Mainland, in spite of the economy slowdown. ‘Notably, not a single one of China’s corporate real estate executives surveyed expects their portfolio to shrink’, the survey reads.

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