TRANSFORMATION AND OPPORTUNITIES OF JING-JIN-JI CITY CLUSTER Series 2: Explore Opportunities from Beijing Urban Renewal Activities CBRE RESEARCH TRANSFORMATION AND OPPORTUNITIES OF JING-JIN-JI CITY CLUSTER Series 2: Explore Opportunities from Beijing Urban Renewal Activities TRANSFORMATION 06 AND PART ONE CHANGES OPPORTUNITIES OF 12 JING-JIN-JI CITY CLUSTER PART TWO OPPORTUNITIES Series 2: Explore Opportunities from Beijing Urban Renewal Activities CBRE RESEARCH 2 | CBRE RESEARCH CBRE RESEARCH | 3 TRANSFORMATION AND OPPORTUNITIES OF JING-JIN-JI CITY CLUSTER Series 2: Explore Opportunities from Beijing Urban Renewal Activities Introduction In order to fulfill Jing-Jin-Ji coordinated development strategy, consolidate foothold in the strategic positioning of capital city, and build an international metropolis with economic efficiency and habitable living conditions, Beijing Municipal Government has introduced and implemented a number of plans and measures that have a major impact on the future development of the city, which target to decentralize non-capital functions of Beijing, transform the mode of urban develop- ment, improve the urban governance system and effectively ease "big city diseases". The transforma- tion of urban functions will promote the change of urban space to meet the new demand of economic and social activities. Therefore, urban renewal has gained intensive attention from developers and investors. Government plans and policies, economic laws of real estate market development and the evolution of finance and technology are the important factors influencing urban renewal. In the paper, it will take all of them into account and explore the development direction of urban renewal of Beijing under the dual action of government supervision and market allocation of resources. CBRE RESEARCH | 5 TRANSFORMATION AND OPPORTUNITIES OF JING-JIN-JI CITY CLUSTER Series 2: Explore Opportunities from Beijing Urban Renewal Activities Positive and Negative List Changes The “Positive and Negative List of the Use of modes must be in line with the industrial development Construction Projects” issued in March 2018, further of the government. defined the renovation types of land and property use that were restricted or encouraged in various regions. Qualitative change: It is found that (Figure 2) many types of land and This will play a vital guiding role in the future direction property will have less participation in market Development and use The New Master Plan of urban renewal in Beijing. Under the implementa- orientation, and the land and property use of spaces to be strictly tion of the list, the inventory scale of various types inclined to government orientation will be regulated of properties in different regions will be changed. adjusted. In practice, the government provides more The "Beijing Municipality Master Plan (2016–2035)" five new towns; one region is an ecological conserva- preferential policies such as fast-track approval, tax (hereinafter referred to as the "New Master Plan") tion area consisting of Mentougou, Pinggu, Huairou, According to the use of the land, all the property Quantitative change: and financial incentives for the encouraged issued in September 2017, showcases a basic Miyun and Yanqing. The new master plan also defines forms mentioned in the list can be classified into four Scale of land and adjustment activities. On the other hand, the approval framework of the urban development in China's Demand side: the functions of each administrative district (Figure 1). categories: commercial, industrial, residential, of some adjustment activities are restricted or capital city to 2035. properties to be Defining the administrative/public, which have different levels of prohibited to ensure the effective implementation of It is worth noting that the new master plan defines the restricted for functional positioning participation in market forces. Traditionally, the market the policies. The new master plan clearly defines the strategic development ideas of scale reduction of construction commercial use, of the city and each orientation for commercial and residential land use is positioning as the center of China's politics, culture, land, in which the reduction of intensive land use, encouraged for district the most obvious, providing the greatest degree of In addition, the government has successively issued a international exchanges, and technological innovation efficient utilization of existing land resources and technological and freedom for developers and investors to determine the series of policies on the development, use, renewal and the spatial layout plan. The central city includes buildup of greenbelt area are the key guidelines public use Supply side: development and disposal models; administrative/- and conversion of various types of land and the capital core functional area composed of particularly emphasized on the central city. The public land use is allocated by the government, with properties. The series of policies are the supplement Dongcheng District and Xicheng district, as well as the CRE development construction land is expected to reduce from 910 little opportunity for market participation; for the and provide guarantees of implementation for the four districts of Haidian, Shijingshan, Chaoyang and focus shiing from square kilometers to 860 square kilometers by 2020, industrial land use, its development and disposal new master plan. Fengtai, which are the core areas to assume the incremental market to and by 2035 it will be reduced to about 818 square capital functions of Beijing; Tongzhou district, is now stock market kilometers, while other areas focus on intensive playing the role of Beijing's municipal subsidiary sustainable development. This means that the new Figure 2: Change of Property & Land Use Encouraged in Each District by The Government administrative center in the eastern suburbs, will be supply of commercial real estate in the emerging Source: CBRE Research Q2 2018 the new seat for Beijing municipal government regions will be under control, and the core assets Commercial/Residential Industrial Administrative/Public departments to promote the coordinated development of mature regions will become increasingly scarce. Market Government of the eastern part of the city; two axes, the central On the other hand, urban renewal and inventory Orientation Orientation axis and Chang'an Avenue will be further extended to property renovation will become the key ideas to improve the distribution of national political, cultural resolve the contradiction between supply and and diplomatic functions; multi-points are made up of demand in local areas. Shunyi, Daxing, Yizhuang, Changping and Fangshan Wholesale Factory/Logistics Before Figure 1: Functional Positioning of Each District Capital Core Source: CBRE Research Q2 2018 Functional Area Central Government Office & International Technological Senior Housing Administrative District Politics Culture Exchange Innovation Office/Retail/Business Park Submarket After Amenities / Pre-school Education Capital Core Functional Area Financial Street/Xidan/Wangfujing/ (Dongcheng/Xicheng) East 2nd Ring Road Northwestern Central City Zhongguancun/Shangdi/Z-Park/ (Haidian/Shijingshan) Beiqing Road/New Shougang Area Out of Wholesale/Retail/ Factory/Logistics 3rd Ring Road Office/Hotel Northeastern Central City Before (Most of Chaoyang) CBD/Lufthansa/Olympic/Wangjing/BEZ Southern Central City Lize/Nanyuan-Dahongmen Central City (Fengtai/Southern Chaoyang) Out of (Out of Capital Core 3rd Ring Road ZGC Policies Areas Sub-Center (Tongzhou) Canal Business District Functional Area) Leased Apartment Technological Innovation / Pre-school Education / After Senior Housing Public Culture Shunyi Capital Airport Economic Zone Daxing New Airport Economic Zone Retail/Office/Hotel Yizhuang BDA Before Wholesale Factory/Logistics Changping Future Science City Sub-Center/ New Towns/ Fangshan Eco-conserving Eco-Conserving Districts Districts Eco-conserving Districts New Towns Pinggu: Integrated logistics port to service for the capital Technological Huairou: International exchange, technological and cultural development zone After Resort Hotel / Catering / Innovation / Agricultural Advanced Compulsory Education / Others Yanqing: International cultural, sports, tourism, tourism, technological innovation Entertainment Senior Housing Technology Manufacturing Public Culture / Healthcare development zone 6 | CBRE RESEARCH CBRE RESEARCH | 7 TRANSFORMATION AND OPPORTUNITIES OF JING-JIN-JI CITY CLUSTER Series 2: Explore Opportunities from Beijing Urban Renewal Activities From the analysis of the new master plan and its related Impact of Master Plan and Regulations policies, a basic prediction of the increase and decrease of the scale of various types of land and properties in the future may As the capital of China and one of the megacities, the be concluded under the government planning framework (Figure demand side of various commercial real estate sectors in 3). At the same time, the government will step up intervention Beijing will keep up the momentum; increment of supply and regulation of the development and utilization of urban side is limited by the implementation of the urban planning Short-term: space in Beijing, especially in the central city. The further and policy in the above-mentioned cities, which is expected suppression of speculation in the real estate market is another Office, logistics, to exacerbate the situation that the current office, important signal conveyed