28 November 2014
Beijing: from symbolic capital to Chinese super-city
When Julien Zhang joined JLL in Beijing in1996 he was one of a five-strong team in a fledgling Asian economy. Fast forward 18 years and the growth of the company alone is remarkable: today, there are 320 professionals in the office and a further 2,400 on-site staff. And what a 'site' Beijing is to manage. Where once stood a smattering of skyscrapers, JLL now manages over 65 properties totaling 5.5 million square metres of space. Beijing has materialised as more than the symbolic capital of the People's Republic; it's the second-largest city economy in China and home to more Fortune 500 headquarters than anywhere else in the world.
While Zhang - Managing Director, North China - spent a year in the JLL office in Sydney, followed by another year in San Francisco, he ultimately returned to Beijing in 2002. He recounts his view of China over his 18-year career with JLL.
What are the most significant changes you have seen in China over two decades?
When I first joined there were just five people in the Beijing office and today there are 320 plus another 2,400 on-site staff – so a total of around 2,800 JLL staff in Beijing.
Our client mix has definitely changed from Western to more local Chinese companies and that really began around 2011 when we started to see the mix split half and half. In my first 10 years with the company, most of the clients – corporations, developers, and investors – were Western MNCs. This reflects a bigger trend: there are now 100 Chinese companies in the Fortune 500 list and 71 of them are based in Beijing. There are also many state-owned enterprises and private firms here.
How has the physical environment changed?
There were only two to three high-rise office buildings when I first started. The skyline of the city has changed completely. New sub-markets are emerging and becoming clearer. For example, 10 to15 years ago, it would be hard to say where the preferred location for IT or financial firms was, but now it's clear. Beijing has also continued to grow with satellite cities emerging on the outskirts.
How has the real estate business evolved?
It used to be that the government did everything but now things have changed. For the 12th five-year plan the city planners sought a professional firm to help them see where the market was going. JLL was chosen as the exclusive advisor to five district governments from 2011 to 2013: Dongcheng, Xicheng, Chaoyang, Changping, and Fengtai – that's more than 75 per cent of the whole Beijing area. We advised on the land planning, use ratio and other aspects in the property section of their latest five-year plan.
In terms of market share and service offering, JLL is the only dominant firm in Beijing today. And, amazingly, most of our team leaders have been in the office for more than 10 years. We have the most stable team in this region, and this is unique in the market. It is very important for clients because they only see results in real estate months, or years, down the line.
What are some of the most notable projects you have been involved in?
We've been involved in many landmark projects such as the Olympic Park in Beijing, and the Bird's Nest – the Beijing National Stadium. During the opening ceremony of the 2008 Olympic Games, we had 1,000 people standing by to make sure things ran smoothly. We managed the Bird's Nest before, during and after the games.
Another iconic property is the CCTV Tower: JLL is still the property manager. It's a truly unique product, we provided not only consultation and advisory but are also deeply involved with it – at the moment we have 35 people on-site.
What challenges do you face in such a rapidly growing market?
A big challenge is improving building and property management.
In China and Asia in general, owners are of the mindset that they have to do everything. But with time, they realise it's not easy to manage, lease, and find investors and so they come to us, which is why we're seeing an increasing number of Chinese companies among our clients.
The commercial real estate sector has only just started in Beijing compared to cities like London, New York and Singapore, so the opportunities are huge. But the biggest challenge we face is the shortage of talent. Things are becoming better: more people understand the industry and there is strong demand driving universities and other training institutes to start real-estate courses.
What else is being done to address the talent shortage in China?
Three years ago we established the JLL Academy to train people– we're now seeing the results of our talent pipeline. The academy is based in the hub cities of Beijing, Shanghai, Guangzhou, Chengdu and Hong Kong where we hold weekly training sessions. 90 per cent of the places are for our own staff and 10 per cent of the places are open to our clients.
What future opportunities do you see in the market?
We face a changing market. Our clients have different requirements now, for example, when they are venturing overseas, or retailers that have to deal with the rise of e-commerce.
Chinese companies will become important global players and they will venture abroad – it's what the government is encouraging them to do.
Two and a half years ago, we set up a new platform, the China Business Desk, which I am leading,. The objective is to help Chinese companies find opportunities abroad – to not only act as a link and liaison for buying buildings, but to also assist them in adapting to the local market. We have team members in Shenzhen, Shanghai, London and the United States to support them.