The evolving context of “building” in modern real estate market
In the Chinese language, the word “building” literally refers to the combined meaning of two characters “lou” and “yu”. Chinese characters “lou yu” not only incorporate architectural structure but also the concept of functionality, and has had this interpretation since ancient times. Architecturally speaking, the term embodies different variations of floor area, structures, facades, underground and other aspects.. In terms of functionality, besides residence, the term covers a wide spectrum of functions including research, manufacturing, storage, retailing, working and other economy-related activities. Therefore, in the modern real estate context, the concept of “lou yu” is not just limited to office buildings, but also comprises retail, hotels, apartments, industrial parks, logistics and manufacturing, all of which are a part of the scope of the “building economy”.
What is the Building Economy 3.0?
Entering 2018, China transitioned its economy from pure growth orientation towards a period of industrial restructuring and upgrading, marking the beginning of a new era for China’s building economy. We define it as the Building Economy 3.0. The difference is the capability of integrating the property market and industries. During the 3.0 era, buildings and the economy will integrate in an unprecedented way, as buildings will no longer be limited to serving as hardware or real estate properties, but rather as a means to drive the economy. Moreover, impetus for the development of the building economy has shifted from being market-oriented to technology-driven.
An analytical model of the key trends of Building Economy 3.0
Enterprises and people are central to the building economy. The horizontal axis views the needs of enterprises and their people, while the vertical axis measures the economic drivers. Each quadrant demonstrates a future trend of building economy as follows.
The Building Economy 3.0 is almost at its most technically advanced stage, as it has strongly integrated technological implementation into the entire lifespan of real estate projects, ultimately changing their future development paths. The building economy will continue to put emphasis on the concepts of sustainability and health, collectively realizing China’s strategic goals for sustainable development. Growth of the sharing economy allows idle resources to be better utilized, increasing overall efficiency.
Investors, occupiers and third parties are all facing new opportunities amid the headwinds and challenges in today’s market. Space and amenities built by investors will continue to highlight the elements of technology and sustainability, while operations will focus on further developing the themes of sharing and inclusiveness. Occupiers will enjoy more eco-friendly, green and healthy building spaces, which should in turn stimulate productivity and work efficiency, and enhance overall enterprise competitiveness. Third parties are dedicated to integrating the latest trends into their services so that their clients will receive the most cutting-edge technology services, helping them achieve value add and promote market change. We look forward to Building Economy 3.0 as a sustained driving force for the future development of the economy and industry.
Source: By Jacky Zhu, Head of Research for West China, JLL