Real Estate Association Study Tour: Final Thoughts

Our final day abroad was spent traveling to Hong Kong, experiencing the process of passing through immigration from mainland China to Hong Kong Island. We learned that due to political limitations, there is a daily cap of residents of mainland China who are able to visit Hong Kong in any given day.

Our planned company visits were complete and we had a full day on Saturday to explore Hong Kong. The island was not as I expected it. Previously, I saw photos of the International Finance Center, a sky scraper housing restaurants, a mall, the logistics and baggage transfer portion of Hong Kong airport and large firms in its tower. I extended this image to the rest of Hong Kong and imagined it as an island covered in large, marble office towers housing retailers of luxury goods.

Instead I explored the narrow, hilly streets lined with everything from local fare to high-end fashion designers and artisans’ boutiques.  We visited the Police Married Quarters (PMQ) which is an adaptive reuse project consisting of two buildings formerly used as police barracks that have been transformed into a unique shopping mall housing local and international artisans and their trendy wares. The phrase “hipster central” would be an appropriate descriptor of this mall.

The city has rich character. Unfortunately, we only visited for one short day and were unable to see even a fraction of the sights available to us. Unlike during the previous days, we used Saturday to explore the city in small groups, deepening our conversations with one another and really coming together as a group.

As I reflect on this past week during my 16-hour plane ride home, the following thoughts come to mind:

1. I’m grateful for the opportunity to witness China develop as a nation. I’m curious to see if this government-initiated (almost forced) growth and expansion will propel Guangzhou and Shenzhen into sustainable growth or if it will create the next ghost cities due to oversupply of office buildings.
2. What is the future of public transportation expansion in Singapore and China as this is the one feature critical to upholding future real estate development?
3. Will China ever place a moratorium on the number of massage parlors present?

 

Nicole Atoyan ‘17

Real Estate in China: Just Build It

Heavy mist and grey skies greeted us as we walked off the plane in Guangzhou, China. The same climate bid us goodbye as we drove to Shenzhen one day later.

The last two days in southern China, first in Guangzhou then in Shenzhen, have been fast-paced as we’ve visited 7 major leaders in the real estate landscape here. The contrast between Singapore and southern China is stark. Singapore is a small city-state with a population of 5.4 million people. Guangzhou, largely recognized as the world’s manufacturing center, boasts a current population of 14 million and is one of China’s 5 National Central Cities. Singapore is pristine. Guangzhou is noticeably a busy, less manicured manufacturing hub and exhibits signs of development. There is a far greater number of cranes in the sky in Guangzhou and Shenzhen than there are in Singapore. Construction is around every corner, largely because land owners must develop newly-purchased land within 2 years of purchase and understand that building income-producing real estate assets is a safe harbor compared to holding cash that may lose value against other international currencies.

We were fortunate enough to visit the the Ping An Financial Center – a 600-meter (1800-foot) Class A office building, which is soon to be completed. This building is the third largest in China and is due to open in April. It will house Ping An, a large regional life insurance company, and several high technology and finance companies. Most importantly, its construction marks the creation of a structural icon in southern China, much like the Empire State Building is in New York City. In fact, the building’s ownership originally requested it look identical to the Empire State Building and subsequently scrapped the idea after viewing the model and deciding that the scale and shape of the structure didn’t quite match the surrounding real estate. The building is 118 floors and boasts an observatory: the first in Guangzhou and undoubtedly a future major attraction and revenue source. We donned hard hats through the construction site, boarded one of 4 double-stacked elevators and travelled to the 56^th floor where we experienced the leasing team’s impressive marketing video on floor-to-ceiling screens all around us. We were 1 of 15 tours that day.

On the social front, the LN Garden Hotel in Guangzhou hosted a happy hour for our group, complete with a live band, a dim sum bar, a noodle bar, a full dessert table and a party bus. After a long day of traveling from company to company, this was a welcome surprise! An even better surprise occurred when our resident singer requested Frank Sinatra’s New York, New York and took the stage to serenade us all for the next 5 songs. Dancing en masse ensued. Pictures are of course provided below. Who knew we had so much CBS talent in our group?

Nicole Atoyan ’17

Singapura: Utopia

Over the last three days in Singapore, we’ve visited 7 corporations and government agencies and have been immersed in Singaporean cultural and civic lessons. This city-state that gained its independence a mere 60 years ago from Malaysia and became a melting pot of cultures from all over Asia, advancing technologically and socially at a rapid pace.

During our visit here, Singapore struck me as a utopia of sorts. This view is shaped by the city-state’s impressive strategy around public housing. When the Housing Development Board (HDB) was formed in the 1960s as a component of the new independent government of Singapore, then Prime Minister Lee Kuan Yew had a view for citizens: home ownership for all, despite socioeconomic status, to give them a stake in the country. Not only was his vision to encourage home ownership, but to make it affordable enough that homelessness and squatter living would cease to exist as a pervasive problem.

A shocking 85% of the Singaporean population now lives in public housing, which is either purchased or rented from the HDB. Public housing in Singapore is of very high quality and  features attractive and varied floor plans. Such a development, the Pinnacle@Duxton, is pictured below.

Most interestingly, it’s a social engineering experiment. In order to foster racial harmony, the Singaporean government (and by extension, the HDB), mandates that each floor in a public housing development be racially integrated. Families of the same nationality cannot live next door to each other. Neighbors must be of different nationalities. (Largely, the mix is South Indian, Malay, Chinese, Singaporean and others who are permanent residents.)

Housing is heavily subsidized by the government for families and couples. Singles aren’t permitted to rent or purchase public housing until age 35 since the Singaporean government strives to encourage marriage and family formation given the anemic birth rate. Low income families are not denied high-grade housing and their rent is heavily subsidized based upon their income. They can rent for as little as $52 USD per month. This policy justifies the low (almost 0%!) homelessness rate in Singapore.

It’s also interesting to note that apartment sales are leasehold, meaning the owners “own” the apartment for 99 years after which the apartment reverts back to the government for restoration and resale.

Our visit to Singapore ended with an alumni reception at Spago hosted by Morgan Stanley at the Marina Bay Sands Hotel. A breathtaking view of the bay surrounded us as we gathered with alumni and newly admitted students. It couldn’t have been a more perfect conclusion to our stint in Singapore.

I am so amazed at how far this city-state has come in 60 years of autonomy and development and I’m so intrigued by what they’ll accomplish in subsequent years.

And now, off to China!

Nicole Atoyan ’17

Singapore, China & Hong Kong: the journey is upon us!

When I think of Singapore, skyscrapers and images of technological modernity immediately come to mind. I would be remiss by neglecting to mention the image of The Jetsons – a once popular American cartoon – that also comes to mind for me when this hyper-developed nation is mentioned. The trip will formally begin in two days, when 40 Columbia Business School students and two faculty members from the Paul Milstein Center for Real Estate depart for a study tour of Singapore and the Pearl River Delta region of China. The fortunate portion of our group that hasn’t endured an endless stream of final exams has already departed, visiting the beaches of the Far East before heading to Singapore.

Our first day will be filled with cultural visits: a visit to the Gardens by the Bay (pictured here), Chinatown and Little India. A riverboat tour and dinner at one of the most notable seafood restaurants will follow.

We’ll spend the next two days meeting with leaders in the real estate industry: multinational companies such as Blackstone Real Estate Partners, the largest real estate private equity company in the world, and Capitaland in addition to strong players in the regional market such as GIC. We’ll end our Singapore experience with an alumni reception at Spago.

Guangzhou, nicknamed the City of Flowers in southern China, is our first stop in the Pearl River Delta region. This area is considered the birthplace of the ancient maritime Silk Road, now used as a major trading and transportation hub.  This major city is an important commercial center in China and a focus for real estate development and investment.

The group will also explore Shenzhen – another major commercial center in the Pearl River Delta. Meetings with Vanke, Jones Lang LaSalle, Swire Properties, Fosun and site visits of the Ping An Finance Center and the Qianhai project await.

The trip will end with a day to explore Hong Kong before returning to New York City. I can’t wait for the adventure that lies ahead. I am, however, hoping to sleep for the duration of the 21-hour flight there!

Nicole Atoyan ’17