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A sustainable Chinese city? There's no such thing

Mark L. Clifford weighs in on China’s leadership in green building and energy efficiency

[caption id="attachment_59565" align="aligncenter" width="1000"]Shanghai. Image: Patrick Foto/Shutterstock Shanghai. Image: Patrick Foto/Shutterstock[/caption]

Last month, Shenzhen beat 80 cities in China and Europe to claim the top prize at The Euro-China Green & Smart City Awards. It’s another proverbial feather on the cap for China, a country touted in recent months as an unlikely frontrunner in the effort to mitigate climate change.

Viewing any one Chinese city as an out-and-out exemplar in sustainability may miss the point, however. “I don’t think that any city in China can be called green or sustainable,” said Asia Business Council executive director Mark Clifford, the keynote speaker at last year’s Property Report Congress in China. Although the Chinese government has heavily invested in building codes since the 1980s, they remain “fairly lax” and allow buildings in the country to use 80 percent more energy than their US counterparts.

[caption id="attachment_59571" align="aligncenter" width="740"]Mark Clifford speaking at Property Report Congress 2015 Mark Clifford speaking at Property Report Congress 2015[/caption]

If current trends were to hold, energy use by the Chinese building sector is on track to double by 2050, Clifford warned.

The onus is particularly heavy on China, rated as the largest contributing country to emissions from fossil fuel and cement production, according to a 2012 Belfer Center study. China’s building sector is expected to use more energy than any comparable sector in other countries by 2030.

That said, China has shown a propensity for atoning for its massive carbon footprint, if not missteps against the planet. “Recent studies have shown that China could keep building energy use roughly flat through 2050 if it invests in high-efficiency technologies and best practices,” said Clifford, lauding Beijing and Tianjin’s adoption of building standards that are as much as 15 percent more stringent than national standards. “That’s good news.”

More: Singapore ranks second in the world for green buildings

China’s gumption to reverse global warming can be attributed to equal parts self-preservation and political maneuvering. The pall of air pollution hangs heavily on dozens of cities in the mainland, particularly in the capital Beijing.

“Chinese leaders want to improve the quality of life in their nation’s cities by reducing air pollution; win large shares of promising export markets for green technologies; and increase China’s 'soft power' in international relations,” said Matthew E. Kahn, professor of economics and spatial statistics at the University of Southern California. “Taking aggressive action to cut carbon emissions helps China in all three areas."

[caption id="attachment_59563" align="aligncenter" width="1000"]Smog in Beijing. Image: designbydx/Shutterstock Smog in Beijing. Image: designbydx/Shutterstock[/caption]

Moneyed citizens are not unheard of to emigrate from China literally in search of breathing space — a need that real estate firms should take into account. “Every developer in Beijing or in Shanghai is competing more or less on an equal footing in the same smoggy environment throughout the city,” Clifford said. “The question is how this will play out in the future. Will we really see domestic demand fall because more middle-class families move abroad? We have seen significant numbers of Chinese families moving abroad in part because of pollution – the impact on Vancouver is an obvious example.”

In the end, it is difficult to dismiss the strides China has made in the pursuit of green building. In a ranking released by USGBC last year, China emerged as the number one country in terms of Leadership in Energy and Environmental Design (LEED). Boasting 34.62 million gross square meters of certified LEED space, China bested such countries as Canada, India, Brazil, and South Korea in sustainable building design and construction.

With big shifts on the global stage imminent, and the US preparing to renege on its own gains in the fight against climate change, China is a green revelation.


Read next: Could green building finally be taking off in China?

What to expect at the Property Report Congress China 2016

Asia’s senior industry leaders will meet face-to-face at the JW Marriott Hong Kong on 7 December to discuss the region’s key and emerging property markets

property-report-congress

After successfully holding real estate conferences in six cities around Southeast Asia throughout the year, the region’s industry-leading Property Report magazine’s acclaimed series will be held in Hong Kong for the first time on Wednesday, 7 December 2016, at the prestigious JW Marriott Hotel.

Organised by PropertyGuru, Asia’s leading online property group, Property Report Congress China will feature a number of senior figures from Hong Kong, Macau, Vietnam, Thailand and Myanmar. Conference speakers and delegates will discuss the past, present and future of the region’s real estate markets in relation to China and the impact of Chinese outbound and cross-border investments.

As a precursor to the annual China Property Awards black-tie gala dinner, the whole-day conference will be held from 08:30 to 15:30 before the awards ceremony. After a brief intermission, it will be followed by the international networking cocktail reception at 18:00 leading to the gala dinner at 20:00-22:30.

Mark Clifford, executive director of the Asia Business Council and a Property Report Congress 2015 alumnus, is confirmed to give the opening keynote address entitled “Greening Asia: New Thinking in China’s Property Sector.”

According to Clifford, he was impressed with the quality of speakers at the inaugural Property Report Congress in Singapore last October 2015. “I am pleased to be part again of a community of professionals who are quite literally reshaping Asia – the men and women who are building the region’s future.”

His 2016 keynote speech will highlight China’s green approach and touch upon the initiatives of the private sector as well as the national government’s efforts to promote sustainable development.

“China’s approach to green building is very prescriptive, quite top-down, very much command and control. China has some very good initiatives. As with so many other areas in China, the real issue is enforcement. The record there is mixed,” he admits.

“The good news is that China is well aware of global standards and shows increasing signs of commitment to a new approach to energy – so far this have been more on the production side (for example, renewable energy) than on the consuming side, but that may be changing. It would be interesting to have a conversation about it with the region’s industry professionals.”

The Hong Kong-based Clifford, a former editor-in-chief of the South China Morning Post, will join other respected names in the world of property development, architecture and design at the conference.

Related: Top developers shortlisted for the 3rd China Property Awards 2016

Atkins Hong Kong’s senior design director Ian Milne will present a case study on Landmark 81, a Vietnam Property Award-winning skyscraper in Ho Chi Minh City, in his 40-minute workshop entitled “How to Build a Super Tall Building in Southeast Asia.”

In his speech focused on Asian investors, David Faulkner, executive director at Colliers International, will provide a roundup of locations where expats can buy property in East Asia and why investors should buy real estate in certain countries. The analyst will also talk about pitfalls or concerns in each investment location.

Panelists who are confirmed to join the in-depth panel discussions on emerging and established real estate markets include experts from the Asia Property Awards series: Thailand’s Simon Derville, deputy vice-president for Business Development at Thailand Property Award-winner Raimon Land PLC; Myanmar’s Craig Maturi, general manager at Myanmar Property Award-winner Yoma Strategic Holdings, Ltd (Thanlyin Estate Development – Star City); and 30-year industry veteran Paul Tse, vice-chairman of the China Property Awards judging panel and incumbent president of the board of the Macao Association of Building Contractors and Developers.

Early bird passes for the conference are available until 21 November only. Single entry is USD360 (full price: USD400). Bundle packages with the China Property Awards are also available for USD635 (full price: USD635) and a group of 10 early bird discount for USD5,715 (full price: USD6,300).

Participants can register online. For bookings and other enquiries, email conference director at Amy@propertyguruinternational.com or visit the official website.

Will ASEAN integration be a game-changer for the region's property markets?

There's strength in union

[caption id="attachment_51220" align="aligncenter" width="740"]ASEAN single market is finally a reality ASEAN single market is finally a reality[/caption]

After years of anticipation and delay when it seemed it might never happen, the seventh largest single economic market in the world was inaugurated as 2015 drew its last breath.

Since it was first rubber-stamped the ASEAN Economic Community (AEC) was obviously going to be a game-changer. With a combined population of 600 million and a total overall market value of around USD2.6 trillion, the 10 nations that comprise ASEAN represent a hugely significant economic engine.

Few things are clear cut in today’s global economic climate, however, and the leap into the unknown that is the AEC leaves plenty of unanswered questions – especially at this early stage. Unlike comparable entities like the European Union, the participating AEC nations will retain separate currencies and wildly varied policies on everything from property ownership to labour conditions and human rights. With no historic precedent and numerous factors at play, analysts and investors are scrambling to predict how it will affect property markets in both the short and long-term.

“The sheer size of the new economic zone helps to bring greater awareness of the region’s potential,” says Dr Chua Yang Liang, head of research for Southeast Asia at Jones Lang LaSalle.

A widely held view is that the AEC will boost progress of some of the region’s emerging economies where production costs remain highly competitive. “The rising cost of labour in China has helped make Southeast Asia look increasingly attractive for businesses and production,” he adds.

More: The winners and losers in ASEAN real estate in 2015

With international firms, especially from South Korea, Japan, Taiwan and China, looking to outsource manufacturing expected to take further advantage of highly competitive conditions in countries such as Vietnam, Cambodia and The Philippines, real estate markets are also likely to benefit from the continued influx.

Here again, the different approaches taken by member countries to foreign ownership throw up a range of permutations. Property ownership laws vary widely throughout ASEAN nations, ranging from restriction-free Singapore all the way to Myanmar where foreign property ownership is, for the time being at least, illegal.

“Countries such as Myanmar, Indonesia and even Laos where there are tighter restrictions on foreign buyers have lots of potential but much of that remains untapped,” says Desmond Sim, head of research for Singapore & Southeast Asia at CBRE. “They are poised for growth when the political powers allow people to buy into the real estate market.”

Should these countries minimise regulations and expand training programmes, they could rise in economic stature in the coming years. The AEC will not force governments to revise property laws, but many analysts, including Sim and Liang, say that the economic pressure may force them to ease up. Vietnam, for example, recently allowed foreign investors to purchase real estate. Though the move predated the AEC, it is reasonable to assume that there will be similar legislation pushed through in other nations in the coming years.

Although a number of ASEAN nations do not have the potential to become production bases, Sim does not see this as a setback. “Each country will have to look to its own strengths,” he says, which, to the advantage of the community as a whole, are remarkably varied.

More: What to expect in real estate as the AEC era begins

Singapore, for instance, stands to gain from the influx of investment as one of the region’s key financial hubs. Meanwhile, the Philippines, with its skilled, predominantly English-speaking workforce, has consistently benefited from exporting labour to foreign markets and is likely to continue to do so within the AEC. After several decades of working abroad, many prosperous Filipino nationals are returning home to retire, boosting the local residential industry.

Of course, the AEC is unlikely to be a panacea for all economic woes. Mark Clifford, executive director of Asia Business Council, cautions that, “the region looks like it is entering a period of slower growth, especially the more export-oriented and outward-looking economies,” in response to struggling markets elsewhere in the world. The hope is that the AEC will be a bulwark against these uncertainties, but experts agree that the new entity will pose its own troublesome questions.

“There will be some negative consequences, as any open economy would face,” warns Dr Liang. “A possible increase in smuggling, and the dilution of local culture, trades and small businesses as they face stiffer competition from better managed foreign firms are all concerns.”

It is also possible that developers will overreach themselves in anticipation of an influx of foreign companies, Sim says, adding that any kind of demand may cause a rapid increase in supply, which can result in a glut.

Despite some misgivings about how the cards will fall, there’s no lack of optimism about how the future will unfold for the region’s property scene in the brave new world of the AEC.

“I think it will be a boon for most real estate sectors,” adds Sim. “What the AEC hopes to achieve is to make the whole economic region competitive.”

Although Asia may be known for its wealth of superstitions, neither fortune-tellers nor tarot cards can be relied upon to predict the future of the AEC with accuracy. Still stepped-up development, the potential for relaxed foreign ownership laws and a host of other knock on benefits such as major infrastructure projects, however, mean that the outlook is optimistic for real estate investors looking to grab a slice of the newly enlarged pie.

This story originally appeared in Property Report magazine's issue no. 135.

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