Savills Opens New Office in Changsha, Sharing the Future with Central China Economy

Savills, a world-leading British real estate consultancy firm, has further accelerated its pace of expansion in China. Following our office opening in Wuhan earlier in the year, Savills has now opened a brand new branch office in Changsha. The Savills Changsha Grand Opening Ceremony was held on December 18, marking the official establishment of the 16th office of Savills China, laying a solid foundation for exploration of the central region. With the linkage between Wuhan and Changsha, the two major hubs along Yangtze River Economic Belt, Savills will spare no effort to promote economic and industrial growth in central China.

Wang Tize, Deputy Secretary General of Changsha Government; Sun Chunhua, Deputy Director of Changsha Commerce Bureau; Huang Jinguo, Deputy Mayor of Furong District People's Government, Changsha City; Wu Jun, Division Director of Merchants Liaison Office of Changsha Municipal Commerce Bureau; Dai Jing, Director of Commerce and Tourism Bureau of Furong District, Changsha City; Yi Xin, Director of CBD Administrative Committee of Furong District, Changsha City; Duan Chao, Deputy Director of Commerce and Tourism Bureau of Furong District, Changsha City; Li Mao, Deputy Director of CBD Administrative Committee of Furong District, Changsha City; James Norman, Head of South China Outreach Team of British Consulate General; Zhao Xian, Regional Liaison Official of British Consulate General; senior leaders from Savills and more than 20 key media representatives in Hunan witnessed this stirring moment.

Changsha, a Pillar of Vibrant Economic Growth

Driven by economic restructuring, institutional reform, and the opening up to the outside world, Changsha's economy has developed rapidly in recent years. Its GDP grew by an astounding 460% from 2005 to 2015, leading the growth rate nationwide. Changsha's economic aggregate broke the trillion RMB mark in 2017. Moreover, the Hunan government is promoting the integration of Changsha, Zhuzhou, and Xiangtan, into a modern urban agglomeration and its inward-oriented economy is shifting to an export-oriented one. Additionally, Changsha industrial structure optimisation forms seven 100-billion RMB industrial clusters including electronic information and new materials, presenting a modern industrial structure dominated by the service industry.

Like rapidly growing Changsha, Savills has accelerated its expansion in the “Two Hu” area (Hunan and Hubei) with more branches opening in the region. After more than 20 years of real estate experience in the China market, Savills has now established an office in Changsha to introduce our experience of professional real estate consultancy from the UK, give sharp, insightful views on China’s inland market and promote local urban construction and economic development in Changsha.

Witnessed by the government, British Consulate and senior Savills leaders at the opening ceremony, Savills and Changsha Furong District signed a strategic cooperation agreement. Robert McKellar, Executive Chairman of Savills Asia Pacific, and Huang Jinguo, Deputy Mayor of Furong District People's Government, Changsha City, signed the agreement as representatives of both parties.

During the ceremony, Huang Jinguo stated: “Furong District People's Government has attached great importance to the development of the real estate economy. With the completion of a number of high-end commercial buildings and complexes, there is a substantial increase in commercial volume, providing more development opportunities for modern service enterprises. We sincerely hope that Savills, a world-leading real estate consultancy company will further help to develop Furong District and strengthen the cooperation with Furong District in terms of real estate operations, management, leasing services and regional industrial development to contribute to the economic development of Furong and the whole city.”

James Norman, Head of South China Outreach Team of British Consulate General, praised Savills for its efforts to enhance communication between Hunan and Britain: “Savills will be a valuable partner to help Chinese companies expand both at home and abroad. Savills can help Changsha clients can by providing services in China, assisting in investing in the UK or seeking global business opportunities with British companies; Britain will continue to build a successful partnership with China in the future.”

Savills Deepens Exploration in the “Two Hu” Area (Hunan and Hubei) 

Since its establishment 163 years ago, Savills has set up more than 600 offices and affiliates in over 60 countries worldwide. With a total of 36,000 professionals providing comprehensive consultancy, property and asset management and transaction advisory services, Savills is recognized as a market leader.

Savills entered the Chinese market in 1995. Following Beijing, Shanghai, Guangzhou, Shenzhen, Chengdu, Tianjin, Hangzhou, Dalian, Shenyang, Chongqing, Xiamen, Zhuhai, Nanjing, Xi'an and Wuhan, Savills has now entered Changsha, providing one-stop real estate solutions for customers in Changsha and surrounding areas—from preliminary planning and leasing to operations to property and asset management. With its global background, profound local insights, and professional support team, Savills has kept in step with the times, deeply developing the domestic market and taking the lead in the industry with rapid development momentum, an entrepreneurial spirit of commitment to innovation and the courage to break through stereotypes.

Robert McKellar, Executive Chairman of Savills Asia Pacific, spoke highly of the entry into the Changsha market: “Changsha has great development potential thanks to it being an important node along the Yangtze River Economic Belt. The rapid GDP growth and the transformation of the city’s industrial structure are important driving forces for Changsha’s economic development. The establishment of Changsha Office has demonstrated the confidence that Savills has for further expansion of the China inland market. With our steady development in China, we believe our Changsha team will create brand new achievements with great professionalism and forward-looking insights."

Siu Wing Chu, Managing Director of Savills Central China, was full of confidence for the development of the Changsha office: “The pace of development in Changsha has been accelerating, and the demand for consultancy services—such as regional planning and project development consultancy—has been rising. Savills China will provide comprehensive support for the Changsha office. We will fully combine the international vision and local experience, with our professional team’s introducing advanced professional concepts into the fast-growing Changsha market, and working together with our clients to create a beautiful blueprint of Changsha."

Thomas Ng, Managing Director of Savills Wuhan, had great expectations for the prospects of Changsha office: “Savills established Changsha office shortly following Wuhan, and these two events marked the further development in the central region, promoting our resources and team integration in the 'Two Hu' area and strengthened Savills brand awareness. We expect professional real estate services from Savills will become a benchmark for the real estate industry in Hunan and Hubei provinces and consolidate the development of business collaborations in the 'Two Hu' area.”

Rebecca Hu, General Manager of Savills Changsha, stated, as the “Head of Savills Changsha”: “Changsha is a rising star in inland China, and there is huge potential for the real estate market here. We chose to enter Changsha during the industrial restructuring to bring one-stop comprehensive real estate services to Changsha. We will cover retail, commercial, valuation, strategic advisory services, property and asset management services, and investment, to boost Changsha economic take-off.”

Changsha’s Commercial Real Estate Market Prospects

The opening ceremony was a great success. In the subsequent press conference about Changsha real estate market, Savills’ experts and authoritative media representatives brainstormed an outlook for Changsha’s real estate market.

• China Commercial Real Estate Market

2018 can be called the "great year" of China’s commercial real estate market. Oversupply, area differentiation, and homogeneous competition are common issues faced by both retail and commercial markets. With the rise of e-commerce, mobile payments, and artificial intelligence, the retail market has ushered in a new paradigm. Simultaneously, the owners’ market has changed into a tenants’ market, with co-working and scientific technology development influencing the construction and management of commercial buildings. Chester Zhang, Associate Director of Savills China Research, conducted an in-depth interpretation of these hot spots.

Commercial Real Estate Market

TMT (telecommunications, media and technology) market has continued its double-digit growth in the past year, creating a large pool of employment and strong leasing demand in the commercial market from internet, technology and communication industries.

Chester Zhang said: “Four major trends can be observed in the commercial market. First, a new office model based on co-working has evolved, leading to a new interpretation of creative office space. Secondly, owners and management have higher operational expectations and are looking for value-added services. Additionally, spill over in the core area toward non-core areas are also worthy of attention. High-quality facilities and large supply in non-core areas provide more choices for tenants with limited budgets. Finally, the industrial cluster effect is highlighting and influencing current real estate trends. ”

Retail Property Market

The overall macro data has shown a slight decline, but the market structure is reasonable and the fundamentals are still positive. With upgrading consumer demand, retailers and owners, as the two major market players, are confronted with different challenges.

Chester Zhang said: "More and more online retailers are focusing on offline stores, integrating big data and experiences to create 'New Retail' to attract traffic by utilising online resources. However, there are certain barriers between online and offline business modes. After large sums of money are invested, only a few brands with a clear business model and expansion ability can grow and develop.

For owners, oversupply and a highly competitive market requires higher operational ability. Consumers prefer customised and personalised experience and their demand is constantly upgrading. How to avoid homogeneity and attract more consumers has become the focus.”

• Changsha Commercial Real Estate Market

As the provincial capital of Hunan, Changsha is the political, economic, cultural, financial, educational, and scientific innovation centre of Hunan. Also, Changsha is a pilot zone for comprehensive reform of the “two-type society” in China, taking the lead in the path of sustainable development.

The rapid growth of the economy and the pioneering transformation of the industrial structure have caused significant increases in Changsha residents’ disposable income which is causing a consumption upgrading across the city. The tertiary industry maintains a high growth rate, and the government has attached great importance in attracting overseas investment. Projects with foreign investment in the city have increased by 35.9% YoY, reaching 249 projects, with more than 150 Fortune 500 companies investing in Changsha from January to September 2018. The demand for commercial and retail property is growing and real estate investment has maintained double-digit growth.

Also, with a plan for “one main, two auxiliary and six major areas” in Changsha’s 2035 long-term city blueprint, the positioning of different areas and industrial clusters in Changsha will be more clear-cut. Meanwhile, the transportation network is continuously upgrading with intercity high-speed rail and metro transit becoming more and more developed, which has great potential for the real estate market in the city.

Changsha Commercial Buildings, Retail Real Estate CBDs and Supply

In terms of CBD distribution, Wuyi Square is the core CBD of Changsha’s commercial and retail real estate market. As the main source of supply, it continues to maintain the core position of the city-level CBD and business district. The secondary core business district is concentrated in the Second Ring Road. Commercial buildings are concentrated in Furong Middle Road, Railway Station and Chengnan, while retail properties are mostly distributed in Wujialing, Railway Station, Dongtang, Yingjiawan and the Hongxing area.

Also, the new CBDs are rapidly growing on the periphery, and the distribution of areas with stock shows a multiple CBDs emerging. Binjiang New City has rapidly emerged after government encouragement and has become main supply force after Wuyi CBD. In the next four years, it is expected that more than 2 million square meters of high-quality office space will be available in the market; in the emerging CBDs—such as Wangcheng and Yanghu—large-scale, high-quality projects will emerge and lead the expansion of Changsha’s retail industry to non-core urban areas.

In 2018, the supply is expected to reach its peak in recent years. At the end of the year, a large number of commercial buildings and retail projects will enter the market. Vacancy rates in the commercial market may be pushed up to 40%. Five new retail projects in the first three quarters have brought an additional new supply of 775,000 square meters.

Rebecca Hu, General Manager of Savills Changsha, said: "It is great that both hardware configuration and services of Grade A commercial buildings in Changsha are constantly improving. With the promotion of a dominant tertiary industry, Changsha has attracted more and more foreign companies, driving up the quality of Grade A commercial buildings, while the retail and catering industries have maintained high growth. New Retail, old-timey Changsha, cultural projects, sports experiences, specialized tea and other businesses have emerged further grow Changsha. ”