[photopress:wuhnguan.jpg,full,alignright]Originally the emphasis was on the major cities — the first grade cities of China. Now overseas investors sniff a bargain in places like Wuhan, where top-grade office space costs a third of what it does in Beijing, more than 1,000 km (625 miles) away. Now cranes dot the skyline as government-owned land on the banks of Asia’s longest river sprouts luxury developments.
Hong Kong developers have arrived in droves over the past three years, scooping up prime plots of land. Foreign investors, including investment banks, and overseas fund houses are set to follow.
Edmund Ho, who heads property adviser Debenham Tie Leung’s Wuhan office, said, ‘Some foreign investors are looking very aggressively and some are already getting into in-depth negotiations.’
The optimism is grounded in a belief that Wuhan is poised to benefit from Beijing’s plans to revitalize China’s central regions. The city, a hub for car and steel production, is already making a name for itself in the higher-technology field of optical electronics. In Wuhan, about 22 percent of the city’s top-grade office space is vacant. Developers are betting the vacancy rate will drop as Wuhan’s 15 percent-plus economic growth rate spurs local firms to move into smarter buildings.
A retailer can buy space for about RMB26,000 per square meter in downtown Wuhan, compared with RMB36,000 in Beijing and as much as RMB55,000 in the southern boomtown of Shenzhen.
Chris Yoshii, regional director of economics at Edaw, a U.S.-based property firm with some 300 employees in China, said, ‘Second-tier cities are reaching that critical point where investors coming in now and buying well-located grade-A office or retail space can see greater upside potential.’