Bjarne Bauer, Managing Partner at NAI Sofia Group Shanghai, gives us an insider look at why companies are struggling to move away from China for manufacturing, how foreign companies are incentivized to do business in China, and the real state of Chinese residential and office markets.
At the beginning of summer, 2024, NAI Global’s How’s Biz podcast connected with Bjarne Bauer, SIOR, Managing Partner at NAI Sofia Group Shanghai based in Shanghai, China. As anyone that has met or spoken with Bjarne would attest – at an NAI Convention or SIOR conference – he is always upbeat, informed, and articulate, as he was on this podcast.
Listen and you will begin to understand why. When asked about how he navigates between Chinese commercial real estate owners and investors, local and state government agencies, with clients, occupiers, and business representatives from all over the world (particularly the U.S. and Europe), he used the word ‘humility’ to describe where that process begins. And goes from there.
China’s economy was strictly locked down during the pandemic but has now fully reopened. Its residential real estate industry has made international news for the collapse and bankruptcy by some of the country’s biggest developers, but in the scheme of things, the 20% correction in pricing is small when one considers that housing experienced double-digit price increases for a decade leading up to the over-supply. The office market, like most international cities, is over-supplied, with vacancy rates running around 20% in its largest cities.
Overall, however, the Chinese economy is still growing, albeit not at the same pace as before, and commercial real estate investment is quite active. With geopolitical tension in recent years, some capital did leave the country, but that is changing. Driven by efficiency and the fundamentals of capitalism, Western economies are investing in China again. Listeners will also hear about how business-friendly the Chinese government is.
Foremost, with all the attention given to global supply chains since the onset of the pandemic, Bjarne’s insights as to how goods are actually produced, assembled, packaged and ultimately distributed between countries and consumers may come as a surprise, as there is a significant amount of nuance to manufacturing and supply chain management.
Find out more about Bjarne Bauer and NAI Sofia Group Shanghai here.