Real estate markets, almost everywhere in the world, are divided into tiers. First-tier cities are the prime markets that everyone wants into and then the rest pick up the slack. There’s a world of difference between London and Liverpool and between New York and Oklahoma City, but China is a bit of a muddle on that front. In a country as vast and populous as China, second-tier cities aren’t really the so-called backwaters or insignificant urban centres associated with the phrase. In truth, the country has only four first-tier cities — Beijing, Shanghai, Guangzhou and (debatably) Shenzhen — placing the vast majority of activity in China in those so-called lesser towns. Wuhan, Chongqing, Hangzhou, Dalian, Tianjin and Ningbo among others are often the engine of their province or region and deserve a little respect.
Chengdu is one of the second tier’s most vibrant centres, and is in every way the capital (political, cultural, economic) of southwestern Sichuan. A centre for agriculture, science and technology, finance, defence and manufacturing Chengdu is as historically significant as any city in China, and 80 percent of the world’s rare giant pandas live nearby. The next leap for Chengdu will be with the completion of Tianfu New Town, which broke ground at the end of 2011. The massive, multi-billion dollar development for commerce, industry and residences will include the Palm Springs International Centre, a master-planned “downtown” with nearly half a million square feet of office, hospitality and retail space right near the new International Convention and Exhibition Centre. Smack dab right between them will be the Fairmont Hotel and Residences.
“Chengdu is an important and growing business hub and leisure destination. The addition of Fairmont Residences will complement our hotel, offering a range of accommodation options for those visiting or living in the city and builds upon our brand’s growth in China,” stated Fairmont Hotels & Resorts president Jennifer Fox in a statement. She’s not alone in those thoughts. Even though Colliers International warned of caution in the office rental market in its first quarter 2012 market report, it did point out that, “Compared to [China’s] eastern coastal regions, the midwest regions are still considered by some to have strong development potential. Notably, the rapid development of modern service industries in Chengdu will not only support the high-end office market, but will improve the local economic environment.” According to Colliers, over 150 major multinationals had a presence in Chengdu at the beginning of 2012, among them Nissan, Maersk, DuPont, Adecco, Bayer and Evonik Degussa.
Scheduled for completion in 2013, the Fairmont residences will comprise 382 luxury units right beside the new hotel, slated to open in 2015. The suites range from approximately 970-square foot two-bedroom suites to four-bedroom, 1,400-square foot units and will function independently of the hotel: owners are not compelled to include the residences in hotel stock. But that doesn’t mean there won’t be any owner benefits to be had. Comprehensive perks include preferred access to the hotel’s services and amenities — such as the eventual 39th floor restaurant that will boast panoramic views of the city, the business centre, all fitness facilities and Fairmont’s signature Willow Stream Spa as a start.
Fairmont has been active in the residential sector for over a decade with its residence clubs, Fairmont Heritage Place. Now whole-ownership properties are slowly filtering out, with the first, the Fairmont Residences Pacific Rim in Vancouver recently open, and residences in Makkah — or Mecca — and Fujairah, UAE scheduled to precede Chengdu by a year or two. This follows the hotel’s continued expansion in the region, including properties in Makati, Beijing, Shanghai (the brand took over the historic Peace Hotel), Singapore, Yangcheng Lake, Nanjing for 2013 and Taiyuan for 2014. As for more residences, the next step will come from Jakarta, where a hotel and serviced residence is planned for 2014.
Palm Springs Holding Group (as Chengdu Palm Springs Unielite Real Estate Development) is sitting at the helm for the development of the Fairmont Residences, and the company has compiled a strong luxury portfolio encompassing residential, retail, office and leisure projects as well as golf courses (as Sand River Golf) since its founding in Hong Kong in 1995. Among the services included in annual fees are 24-hour concierge, airport transfer, catering, security, WiFi in all public spaces and housekeeping. Additional services are available for an extra fee, among those custom housekeeping, childcare, laundry services and personal shopping.
As an investment, Chengdu will remain a wait-and-see proposition for the moment. DTZ’s Property Times for Chengdu for the end of 2011 noted residential transactions were up over the previous quarter, but down over the same time a year earlier. End-users also dominated and led the market, largely in properties similarly sized to Fairmont’s offerings. However, on a high note, “Hi-tech districts topped the list for four consecutive quarters, thanks to favourable news of Tianfu New Area and the increasingly beneficial supporting facilities.”