Download - Youguo Liang - China Real Estate Market
-
7/28/2019 Youguo Liang - China Real Estate Market
1/12
1
-
7/28/2019 Youguo Liang - China Real Estate Market
2/12
China and its Real Estate Market:
Transition from High Economic Growth
to High Consumer Class Expansion
Youguo Liang, PhD, CFA
March 2013
-
7/28/2019 Youguo Liang - China Real Estate Market
3/12
THE CHINESE CONSUMER CLASS
Second largest economy with high growth potential
China is still a poor country with low per capita GDP
The consumer class, however, is much wealthier
Consumer class expansion will drive demand growth for commercial real estate
Size of the commercial real estate market is directly linked to consumer class GDP
As China becomes more developed, commercial real estate will represent a larger shareof its economic output
China will be the top growth contributor to global higher-grade real estate
-
7/28/2019 Youguo Liang - China Real Estate Market
4/12
SECOND LARGEST ECONOMYWITH HIGH GROWTH POTENTIAL
Source: Economist Intelligence Unit, Feb 2013
2012 GDP (USD Billion) 2022 GDP (USD Billion) CAGR
UNITED STATES 15,724 24,585 4.6%
CHINA 8,231 23,982 11.3%
JAPAN 5,887 5,921 0.1%
GERMANY 3,401 4,193 2.1%
FRANCE 2,627 3,518 3.0%
UNITED KINGDOM 2,458 3,269 2.9%
BRAZIL 2,260 3,990 5.8%
RUSSIA 2,016 4,201 7.6%
INDIA 1,881 6,002 12.3%
MEXICO 1,194 2,355 7.0%
SOUTH KOREA 1,125 2,246 7.2%
INDONESIA 872 2,444 10.9%
TURKEY 790 1,661 7.7%
-
7/28/2019 Youguo Liang - China Real Estate Market
5/12
BUT STILL A POOR COUNTRYWITH LOW PER CAPITA ECONOMIC OUTPUT
GDP PER CAPITA IN 2012 AND 2022 (000 USD)
0
20
40
60
80
2012 2022
CHINA SOUTH KOREA UNITED STATES
-
7/28/2019 Youguo Liang - China Real Estate Market
6/12
THE CONSUMER CLASS, HOWEVER, IS MUCH WEALTHIER
CURRENT GDP PER CAPITA OF THE CONSUMER CLASS (000 USD)
0
10
20
30
40
50
India China Mexico South Korea Russia Brazil U.S.
-
7/28/2019 Youguo Liang - China Real Estate Market
7/12
CONSUMER CLASS EXPANSION WILL DRIVE DEMAND GROWTHFOR COMMERCIAL REAL ESTATE
CONSUMER CLASS POPULATION IN CHINA (MILLIONS)
0
150
300
450
600
750
2012 2022 2032
CAGR: 9.6%
CAGR: 5.6%
-
7/28/2019 Youguo Liang - China Real Estate Market
8/12
SIZE OF THE COMMERCIAL REAL ESTATE MARKET IS DIRECTLYLINKED TO CONSUMER CLASS GDP
TOTAL AND CONSUMER CLASS GDP OF CHINA (USD TRILLION)
0
10
20
30
2012 2022
CHINA CONSUMER CLASS GDP CHINA TOTAL GDP US GDP
-
7/28/2019 Youguo Liang - China Real Estate Market
9/12
AS CHINA BECOMES MORE DEVELOPED, COMMERCIAL REAL ESTATEWILL REPRESENT A LARGER SHARE OF ITS ECONOMIC OUTPUT
CHINA REAL ESTATE MARKET SIZE (USD TRILLION) AND SHARE OF GDP (%)
0
2
4
6
8
10
12
2012 2022
CHINA REAL ESTATE ($ TRILLION)
0%
5%
10%
15%
20%
25%
30%
35%
40%
2012 2022
REAL ESTATE AS SHARE OF GDP
-
7/28/2019 Youguo Liang - China Real Estate Market
10/12
CHINA WILL BE THE TOP GROWTH CONTRIBUTOR TOGLOBAL HIGHER-GRADE REAL ESTATE
CONTRIBUTION TO GLOBAL REAL ESTATE GROWTH (2012-2022)
18.6%
0.2%
0.5%
0.6%
0.6%1.0%
1.1%
1.1%
1.1%
1.4%
1.5%
1.6%
1.9%
2.0%
2.2%2.6%
4.5%
4.9%
5.5%
14.2%
33.0%
0% 5% 10% 15% 20% 25% 30% 35%
Others
Switzerland
Sweden
Netherlands
Spain
Australia
Japan
Italy
Mexico
Singapore
Turkey
France
Canada
S. Korea
Germany
U.K.
Russia
Brazil
India
U.S.
China
-
7/28/2019 Youguo Liang - China Real Estate Market
11/12
o China is becoming the number one contributor to global growth of institutional-quality
real estate due to strong economic growth, massive urbanization, rising consumer
class and global economic integration
o True demand driver for high-quality real estate of all types is the size, growth andpurchasing power of the consumer class, which is expanding much faster than the
slow rate of population growth in China
o High demand growth, low carry costs and relatively limited alternative investment
opportunities will ensure a high imbedded cyclicality in the growth and expansion of
Chinas real estate market
FROM HIGH ECONOMIC GROWTH TO CONSUMER CLASS EXPANSION
-
7/28/2019 Youguo Liang - China Real Estate Market
12/12
12