Research ReportMay 2015

Expanding Qingdao: new airport to fuel rise of trade gateway

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Executive SummaryThe development of Qingdao Jiaodong International Airport is listed as a priority by the Qingdao government. According to the plan, Qingdao’s new airport will be developed into a regional hub and gateway to Japan and Korea. This paper analyses the significance of the new airport and addresses the following questions:

• What are the drivers behind the building of the new airport? • Why has the new airport been planned for Jiaozhou? • What impact will the new airport have on the development of Qingdao? • How will the new airport affect Qingdao’s real estate market? • What makes a successful “aerotropolis”?

3Qingdao New Airport

Qingdao has an export-oriented economy, and as a result, the city’s air passenger and freight traffic have witnessed fast growth in recent years. The existing Liuting Airport carried 16.4 million passengers in 2014, making it the fifth busiest airport in eastern China after Pudong, Hongqiao, Hangzhou, and Xiamen airports. Liuting Airport is served by 131 flight routes (111 domestic routes, 16 international

Strong Air Transport Capacity

In light of increasing air transportation, the apron capacity of Liuting Airport was expanded for a fourth time in May 2014 to meet growing demand. Liuting Airport was completed in 1982 without an appropriate planning, so airport-area development has been spontaneous and haphazard. The available land for development around Liuting Airport

Qingdao’s Air Passenger Traffic (2004-2013) Qingdao’s Air Freight Traffic (2004-2013)

million passengers2004-2013 CAGR of 14.0%

- 100 200 300 400 500 600 700 800 900

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

'000 tons2004-2013 CAGR of 6.5%

- 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0

10.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: Qingdao Statistics Bureau, 2014 Source: Qingdao Statistics Bureau, 2014

Liuting versus Jiaodong

Liuting Airport Jiaodong International Airport

Aircraft Movement Area Reference Code* 4E 4F

Airport Opening 1982 Construction is likely to begin in 2015; it is expected to be finished in 2019

Direct Distance to Downtown 23 km 40 km

Terminal Area 120,000 sqm 450,000 sqm

Runway length 3,400 m 3,600 m

Cargo Handled 186,000 tonnes (2013) 500,000 tonnes (2025)

Passenger Throughput 14.5 million passengers (2013) 35 million passengers (2025)

*A standard to measure the airport transportation capacity. According to the Technical Standards for the Airfield Area of Civil Airports, issued by the Civil Aviation Administration of China (CAAC), 4F is the highest level for civil airports.Source: Qingdao International Airport Group Co Ltd; Qingdao Statistics Bureau, 201

routes and four regional routes) linking 76 international, regional, and domestic cities. Qingdao’s flight routes already number half those of Beijing and Shanghai, with a high percentage of them accounting for direct routes to Japan and Korea; destinations include Tokyo, Osaka, Nagoya, Fukuoka, Seoul, and Busan.

has been limited, creating a bottleneck in terms of long-term economic efficiency and sustainability. Therefore, the government is seeking alternative solutions, and Jiaozhou, given its geographic location and industrial resources, is the favoured location for the development of a new airport.

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Major functional areas within 5 km of Liuting Airport include the logistics area, industrial area, and commercial area. Located along Shuangyuan Road, many manufacturing plants of the textile, locomotive, electronic information, biological medicine, and new materials sectors have formed an “aerotropolis” industrial area. The logistics area is divided into the eastern and western sections of the airport. The warehouse space east of the airport has the smaller total GFA, but it has greater accessibility. This warehouse space

Liuting Airport Surroundings

Major Functional Areas around the Airport

3 4 56

7

8

9

21

10

11

12

13

14

Major Projects around the Airport

Project Name Sector Status Project Scale

1 GLP Park Airport East Logistics Completed Warehouse GFA 45,300 sqm2 Sinotrans Airport Logistics Centre Logistics Completed Warehouse GFA 24,300 sqm3 GLP Park Airport West Logistics Completed Warehouse GFA 83,000 sqm4 Capital Land Airport International Centre Business Park Phase I Completed Total GFA 185,000 sqm5 ABP Qingdao International Port Business Park Under Construction Total GFA 600,000 sqm6 CMPD LAVIE Commune Business Park Phase I Completed Total GFA 320,000 sqm7 National Advertising Business Park Business Park Phase I Completed Total GFA 530,000 sqm8 DoubleTree by Hilton Hotel Qingdao Hotel Completed 320 Guest Rooms9 Holiday Inn Qingdao Parkview Hotel Completed 319 Guest Rooms10 Four Points by Sheraton Qingdao, Chengyang Hotel Completed 303 Guest Rooms11 Sungwon Outlets Retail Completed Retail GFA 30,000 sqm12 Chengyang Powerlong City Plaza Retail Completed Retail GFA 500,000 sqm13 Yinshengtai Commercial Tower Office Space Completed Office GFA 36,700 sqm14 Haidu International Plaza Office Space Completed Office Space GFA 66,000 sqm

Source: JLL

provides great convenience for third party logistics companies. To the west of the airport, most warehouse projects are clustered along Songshan Road or within Chengyang Logistics Park and provide logistics functions for the industrial area. Around the Chengyang Government building, there is a commercial area that is home to many retail projects, office buildings, and hotels. The different functional areas have formed a strong synergetic relationship, but the industrial structure and the maturity of the real estate market should be further improved.

Logistics AreaPositioning Aero logistics, Bonded logisticsMajor Players DHL, UPS, S.F. Express, Yum, JD

Industrial AreaPositioning Manufacturing, DistributionMajor Players LG, Maersk, Zhong Hai Ocean, Sunnsy

Commercial AreaPositioning Modern services, Residential clustersMajor Players Vanke, Powerlong, Haidu

Chengyang Government 青岛流亭机场3 4 5

6

7

8

9

21

10

11

12

13

14

5Qingdao New Airport

Located in Jiaodong area, northeast of Jiaozhou’s centre and at the heart of “Big Qingdao”, the new airport is expected to help foster urban-rural integration. The newly completed Comprehensive Transportation Linking Plan for Qingdao Jiaodong International Airport covers the layout of a multi-modal transportation network, including

1

2

3

4

5

6 7

9

8

Jiaodong Chosen

Transportation Analysis of the New Airport

Site Analysis of the New Airport

rail, metro, light rail, and expressway, indicating that the new airport has been planned as part of a complex transportation hub. The development of Qingdao’s new airport will further improve Shandong’s regional transportation function as a province and increase the overall competitiveness of the city.

Proposed by Qingdao Government, the “Three City Interlink” strategy aims to further develop the eastern, western, and northern coastal regions around Jiaozhou Bay. Located at the centre of the three regions, the new airport will have the capacity to serve most of the Shandong Peninsula, which makes it an important transportation hub and gateway in Shandong Province.

Yantai

Weifang

Weihai

Dongjiakou Port

Blue Silicon Valley

High-Tech Industrial Development Zone

Qingdao Economic and Technological Development

Major Surrounding Cities/Functional Areas Direct DistanceCore Area of Blue Silicon Valley 60 kmHigh-Tech Industrial Development Zone 20 kmQingdao Economic and Technological Development Zone 40 km

Dongjiakou Port 80 kmWeifang 90 kmYantai 170 kmWeihai 210 km

Railway1 Qingdao – Jinan Railway2 Qingdao – Xinyi Railway3 Qingdao – Jinan Passenger Railway4 Jiaozhou – Huangdao RailwayJinan – Qingdao Railway (under construction; expected to complete in 2018 with a station in the new airport)

Expressway5 Qingdao – Yinchuan Expressway6 Shenyang – Haikou Expressway7 National Highway 2048 Jiaozhou Bay Expressway

Metro

9Metro Line 8 (proposed; to link the new airport and the Northern Railway Station)

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Strategic airport development has the ability to strengthen a city’s overall development potential. City development, on the other hand, increases the demand for airport services, thus forming a continuous cycle.

An Engine for Economic DevelopmentAirports can exert great influence over a region’s economy. Local business and service providers, meanwhile, benefit from direct and indirect economic contributions derived from airports. In addition, business travellers and tourists contribute to greater local consumption during their stay.

In recent decades, along with the development of the aviation industry, airport commercial activity and peripheral industries have been gradually increasing. This has resulted in the creation of “aerotropolises”, a new urban formation and a physical incarnation of globalisation. In an “aerotropolis”, upstream and downstream enterprises on the aviation-related value-chain cluster to transform goods and information more efficiently and ensure a tight connection with the outside world via the airport. As a result, the increasing demand for related business activity brings great economic benefit.

Real Estate OpportunitiesAn increase in commercial activity increases the demand for real estate projects, including business parks, logistics parks, industrial parks, hotels, retail and residential buildings. An “aerotropolis” also attracts large-scale entertainment centres and outlets. This means growing demand for space in Qingdao. Effective land-use planning will positively influence aviation-oriented industries as well as non-related industries, creating economic, societal, and environmental values.

Enhance Regional ImageAside from the measurable economic benefit, the new airport will greatly enhance the image of Jiaodong and Qingdao. The “brand effect” will attract non-aviation-oriented industries to Qingdao, generating greater synergy.

Increase Employment OpportunitiesExperience at other international airports indicates that 10,000 passengers equates to approximately 9.5 direct employment positions and 10.5 indirect employment positions. According to the plans for the new airport established by CAAC, passenger throughput is expected to reach 35 million people per annum by 2025. This could potentially create some 70,000 direct and indirect employment opportunities. (Theory Source: Airports Council International)

Stimulate TourismWith excellent weather throughout the year, Qingdao has always been a popular destination for both international and domestic travellers. In 2013, the city received 1.28 million international visitors and 61.6 million domestic visitors, an increase of 1.0% and 10.2% y-o-y, respectively. On completion of the new airport, the greater passenger throughput capacity and expanded flight route coverage will positively promote the development of Qingdao tourism.

An “aerotropolis”, a new urban form, refers to the area within a 25-km range of an airport where aviation-oriented firms, including business parks, logistics parks, industrial parks, wholesale centres, travel and entertainment centres, and large-scale residential complexes are clustered.

Some of the most prominent “aerotropolises” are Amsterdam Airport Schiphol, Hong Kong International Airport, Incheon International Airport, Dubai Airport, Chicago O’Hare International Airport, Dallas Fort Worth International Airport, Washington Dulles International Airport, and Memphis International Airport.

New Airport to Spur Activity

7Qingdao New Airport

Wealth of Real Estate OpportunitiesQingdao is a major port city on the Bohai Economic Rim in Shandong province and has long-standing and healthy bilateral trade and economic exchanges with Japan and South Korea. Qingdao offers a robust manufacturing base and competitive port facilities that act as the bedrock for the city’s economic development. Sound fundamentals in trade, the city’s strong association with the marine sector, and a growing tourism sector have enabled Qingdao to stand out among China’s emerging cities.

Since 2004, Qingdao’s economy has grown by an average of 15.6% per year, reaching RMB 800.7 billion in 2013. Qingdao’s economy continues to be the largest economy in Shandong province and the top city among North China cities. Since 2011, the tertiary industry, which increased 10.5% y-o-y in 2013 to RMB 401.3 billion, has overtaken the secondary industry as the largest contributor to Qingdao’s economy.

The continued healthy development of Qingdao’s tertiary industry has introduced tremendous opportunity in the real estate market. In 2013, in terms of added-value, the top sectors among the city’s fastest-growing tertiary industries were the financial services, real estate, retail and trading, and professional services. These industries were also the most active in the office leasing market, thus contributing as major drivers of office leasing demand. In terms of business environment, amenities, accessibility, and other relevant factors, tenants in these industries prefer to rent space in office buildings within core business districts. However, firms in fast-moving industries, such as high-tech and logistics, prefer to work in business parks located in the main artery between the airport and city centre.

The wholesale and retail industry, the largest contributor to Qingdao’s tertiary industry, continues to witness stable added-value growth and has built a solid foundation for the development of the city’s retail market.

GDP of North China Cities (2013)

Qingdao Tertiary Industry Composition (2013)

Qingdao Tertiary Industry Growth by Sector & Office Leasing Demand by Sector (2013)

GDP (LHS)

9.6% 8.8% 9.0% 10.0%

12.5%

7.7%

0%

4%

8%

12%

16%

-

500

1,000

1,500

2,000

2,500 RMB billion

Shenyang Dalian Qingdao Tianjin BeijingJinan

Growth Y-o-Y (RHS)% of Total Area RequirementValue Added Growth Rate

Hi-tech

Logistics/Transportation

ProfessionalServices

PublicOrganisation

Retail/Trading

Real Estate

FinancialServices

5.4% 8.5% 8.6%

8.7% 11.9%

13.2%

16.1%

3.8% 6.3%

8.4%

6.0% 13.6%

19.8%

18.9%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

Value Added (RMB billion)

Hi-techHotel/Catering

Real EstateProfessional Services

Financial ServicesLogistics/Transportation

Retail/TradingNon-profit Organisation

141 167

424 452 468

585 818

958

- 200 400 600 800 1,000 1,200

Source: Municipal Statistics Bureaus, 2014 Source: Qingdao Statistics Bureau, 2014; JLL

Source: Qingdao Statistics Bureau, 2014

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Qingdao Real Estate Market Indicators (City Centre)

Logistics (4Q14)Total Stock 941,300 sqmVacancy Rate 14.0%Rent RMB 26/sqm/month 5-Star Hotel* (2Q14)

Total Stock 3,511 roomsOccupancy 60.6%ADR RMB 796

Retail (4Q14)Total Stock 1,710,400 sqmVacancy Rate 4.6%Rent* RMB 320/sqm/month

Residential (4Q14)Inventory* 163,100 unitsSales Price RMB 9,900/sqmSales Volume 8,700 units/month

Business Park (4Q14)Total Stock 1,030,000 sqmVacancy Rate 34.7%Rent RMB 56/sqm/month

Office Space* (4Q14)Total Stock 2,854,800 sqmVacancy Rate 20.0%Rent RMB 91/sqm/month

60 60

27 27

*Refers to total new units available for sale at end-4Q14.

*Refers to the ground floor net effective rent on an NLA basis in prime retail projects.

*Refers to the Grade A and Grade B office markets in Shinan, Shibei and the Laoshan CBD.

*Refers to hotels listed by the Qingdao Tourism Bureau.

9Qingdao New Airport

Retail MarketAs the regional economic centre of the Shandong Peninsula city cluster, Qingdao’s stable economic development has driven steady increases in disposable income per capita in line with fast growth of the consumer class size. Qingdao’s consumer class has grown at a ten-year (2004-2013) compound annual growth rate (CAGR) of more than 40%, the highest rate among major Tier I and Tier II cities.

Consumer Class* Growth of Major Cities

Retail Market Indicators

Retail Sub-market Overview

CAGR 2013-2017 CAGR 2004-2013

7.8% 22.6%

22.0% 26.4%

28.8% 36.1%

28.4% 34.0%

40.3%

5.4% 6.3% 7.1%

8.2% 8.8% 8.9% 9.0% 9.2%

10.3%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

QingdaoWuxi

BeijingNanjing

HangzhouSuzhou

GuangzhouShanghai

Shenzhen

New Supply (sqm)Vacancy Rate Chain-link Rent Y-o-Y Growth

Net Absorption (sqm)

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%

- 100,000 200,000 300,000 400,000 500,000 600,000

2009 2010 2011 2012 2013 2014 2015 2016

Zhongshan Rd Submarket

Laoshan Submarket

Licun Submarket

Hong Kong Middle Rd Submarket

Shibei CBD SubmarketTaidong Submarket

* The consumer class is defined by an individual disposable income of more than RMB 30,000 per annum, the threshold at which individuals begin to consume in shopping centres in measurable quantities.Source: Economist Intelligence Unit, JLL

Source: JLL

Today, premium retail projects are mostly situated in the retail zone of the city centre. Shopping centres that primarily target high-net-worth consumers are largely located along Hong Kong Middle Road and around the Olympic Sailing Centre, including

Hisense Plaza, Sunshine Department Store, and Qingdao Centre. The Taidong and Licun sub-markets are surrounded by high-density residential projects. Malls within these sub-markets that target middle-class consumers and younger populations have maintained high foot traffic and sales volumes.

Overall, established malls with three to four years of operation continue to see high rental growth rates, while new additions to the market require more time to establish themselves and achieve strong rental growth. Rental growth for older department stores is expected to be more moderate and, as detailed above, some have already closed.

Submarket Mass Market Mid-range High-endHong Kong Middle RdLaoshanZhongshan RdShibei CBDLicunTaidongSource: JLL

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We expect a large amount of supply to enter the market over the next few years. With market adjustments and structural repositioning, there will be more premium projects in Qingdao, especially in the retail space surrounding the new airport. The potential retail business formats for the airport include retail space in the terminal building, industrial park amenities, and large-scale commercial projects.

In recent years, the passenger traffic volume of Qingdao Airport has witnessed a stable increase. On average, the CAGR has reached 14.0% in the past ten years. The total GFA of new airport terminal is projected to be 450,000 sqm, with a possible expansion to 600,000 sqm. These factors provide great development potential for retail space within airport terminals.

Among the subject commercial projects, outlets rely heavily on the transportation resources of an airport. By end-2014, the total stock of Qingdao outlets amounted to less than 200,000 sqm, and there is actually no a real outlets mall. But foreign outlet operators continue to show an interest in the Chinese market. In the future, we expect the transport infrastructure that will be built by the new airport will create outlet opportunities in areas between the new airport and the city core.

Logistics MarketGiven the city’s advanced harbour and airport resources, Qingdao is recognised as one of the top cities in Shandong’s logistics market. According to the industrial report released by Shandong Commerce Department, Qingdao’s total value of logistics goods was RMB 2,479.74 billion in 2012, accounting for 14% of the provincial value. Prominent third party logistics providers have entered Qingdao, including DHL, UPS, Expeditors, Nippon Express, SF Express and Deppon, which has elevated logistics demand for high-quality storage facilities. However, given that a majority 65% of tenants within Airport Logistics Park are small and medium-sized domestic firms, much of the demand for logistics space is both modest and price-sensitive.

Top Seven Cities in Shandong’s Logistics Market (2012)

Logistics Sub-market Overview

14%

11% 9%

8% 8% 8% 6%

0% 2% 4% 6% 8% 10% 12% 14% 16%

- 500.0

1,000.0 1,500.0 2,000.0 2,500.0 3,000.0

Total Value of Logistics Goods (LHS)

RMB billion

Qingdao Linyi Yantai Weifang Jinan Zibo Dongying

% of Total Provincial Value (RHS)

Jiaozhou Bay Logistics ParkAirport Logistics Park

Qianwan Port Logistics ParkDongjiakou Port

Source: Department of Commerce of Shandong Province

Logistics projects in Qingdao are mostly located by the harbour and the airport. With excellent port resources and infrastructure, Qianwan Port has formed a large-scale logistics park. The park mainly consists of bonded warehouse space to fulfil the large cargo storage demand. Jiaozhou Logistics Park has also gradually formed, with the Qingdao Container Centre as a major project in recent years. In addition, the development of Dongjiakou Port has been marked as a prospective priority by the Qingdao Government. The port serves as a platform for the transportation of mineral, petrol, coal and other resources, so most resources are stored in the yard.

Airport Logistics Park is an important sub-market in Qingdao. The park has been divided into eastern and western pockets of the airport. The western pocket is closer to Liuting Airport, with greater accessibility. As a result, vacancy remains relatively low. Besides serving aero logistics transportation, warehouses to the west of the airport also support logistics services for industrial enterprises in northern Jiaozhou Bay. Many prominent warehouse developers have already settled in Airport Logistics Park, including Prologis, Sinotrans, and Cosco. Third party logistics is the main demand driver for Airport Logistics Park, followed by e-commerce and fresh food sales companies.

11Qingdao New Airport

Airport Logistics Park Tenants by Sector

2.8%

19.7%

24.9%

52.6% Third Party Logistics

Fresh Food

E-Commerce

Retail Distribution

Source: JLL

The flight route coverage of the new airport will continue to expand. Meanwhile, infrastructure development in areas surrounding the airport will help improve ground transportation capacity, which will have a positive impact on Qingdao’s aero logistics industry. Third party logistics companies, with strong consumer relationships, advanced IT, and value-added service capability, will further continue to stimulate demand for high-quality standard storage at surrounding airport locations.

Online sales growth has been particularly rapid, as an ever-increasing number of shoppers with broadband connections and mobile devices go online. As the business-to-consumer (B2C) market share grows, and more retailers with offline roots go online, third party logistics firms – which have started to provide tailored logistics services to e-commerce firms and traditional merchants establishing an online presence – will drive a wave of demand for logistics space. In turn, this will increase potential for developers to secure large occupiers and acquire land parcels by partnering with big e-commerce firms.

Currently, almost 20% of demand for high-quality airport logistics space comes from e-commerce companies. In 2013, three out of the top ten Chinese B2C platforms established distribution centres in Qingdao, namely JD, T-mall, and Dangdang. In the future, improved flight route coverage, cargo capacity, and workflow efficiency will enhance Qingdao’s competitive advantage and attract more international e-commerce companies.

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Business Park Sub-market Overview

Source: JLL

Business Park MarketThe development of Qingdao’s business parks is at a relatively early stage. Given that collective planning tends to follow the introduction of single projects, the city’s most established business parks are mainly located downtown and include: Qingdao Software Park, Animation and Comics Park, 2.5 Creative Park, and Rubber Valley. These business parks clearly follow an industrial direction, and hold stable tenants with relatively low fluctuations in rents. Though fewer have developed by comparison, large-scale business parks such as High-Tech Industrial Park have started to form in the city. Today, the majority of the projects within the Liuting Airport Economic Zone are strata-titled with end-user demand coming mainly from trading, logistics, IT, and manufacturing companies.

Sub-market Total Stock (sqm) Major Sectors of Tenants

City Centre 469,000 IT, BPO, Animation and Comics, Rubber Chemicals

High-Tech Industrial Park 260,400 Home Appliance, IT, Marine

Biological Medicine, Manufacturing

Airport Economic Zone 164,900 Aero Logistics, Retail/Trading,

Manufacturing

High-Tech Industrial Development Zone 119,300 Biological Medicine, Manufacturing

Economic and Technological Development Zone

100,000 IT, Business Services

Source: JLL

Among the key factors for business park development, the most important are accessibility and amenities; however, these generally require a lengthy period of time to develop well. From the long-term perspective, the new airport will contribute greatly to the development of Qingdao’s business park market. Future projects are expected to cluster along the main artery from the new airport to the city centre, attracting industry.

High-Tech Industrial Development Zone

Airport Economic Zone

High-Tech Industrial Park

Economic and Technological Development Zone

Key factors for business park development:

• High-quality park environment Business parks benefit from nearby surroundings that are rich in abundant natural resources, such as ponds and grass fields, which are important for business park development

• Convenient accessibility Business parks are mainly located in outer areas; therefore, establishing convenient accessibility is crucial

• Amenities Medical facilities, educational institutions, shopping centres, restaurants, and sports and entertainment centres are required to support workforce

• Business growth incentives Training organisations, skill development, and acquisition support provision

• Flexible development model Flexible land distribution models needed to satisfy varying commercial requirements

13Qingdao New Airport

Note: JLL has provided relative services for Chicago O’Hare International Airport, Hong Kong Chek Lap Kok International Airport, and Shanghai Hongqiao Transportation Hub.

Chicago O’Hare International Airport

Airport Opening 1955 • The surrounding area of Chicago O’Hare International Airport has formed a typical “aerotropolis”, where there is even more office, hotel and convention space than in the city’s downtown area. High value industries such as high-tech and biomedical have developed well in this area.

• Synergy can be achieved among different property sectors within the “aerotropolis”. Residential and urban complex projects can be developed to attract residents, while multi-modal transportation and high-quality community amenities can help to reduce the travel time of residents and to improve the efficiency of commercial activity.

Operator Chicago Department of Aviation

Distance to Downtown 27 km

Cargo Handled (tonnes, 2013) 1,434,377

Passenger Throughput (2013) 67,087,921

Aircraft Parking Bays 188

Hong Kong Chek Lap Kok International Airport

Airport Opening 1998 • The surrounding area of Hong Kong International Airport is developing into an “aerotropolis”. The development of transportation infrastructure has helped to drive the development of Disneyland, Citygate Outlets, AsiaWorld-Expo, hotels, and other commercial projects.

• Hong Kong International Airport has an excellent multi-modal transportation system, connecting local destinations by Express Line and shuttle bus; and connecting the Pearl River Delta by coach and ferry. The Hong Kong–Zhuhai–Macao Bridge is expected to complete in 2016. The bridge is expected to improve intercity connectivity and Hong Kong International Airport’s competitive edge, as well as stimulate related commercial real estate development near the airport.

Operator Airport Authority Hong Kong

Distance to Downtown 34 km

Cargo Handled (tonnes, 2013) 4,127,000

Passenger Throughput (2013) 59,903,000

Aircraft Parking Bays 127

Shanghai Hongqiao Transportation Hub

Airport Opening 1921 • Connecting eastern China’s coastal region and the Yangtze River Delta, Shanghai Hongqiao transportation hub is the world’s first fully integrated transportation hub linking an airport, high-speed railway, metro lines (five lines), highways, and expressways.

• The mixed transport hub also serves as a springboard for a range of development, particularly within the commercial and entertainment sectors.

Operator Shanghai International Airport Co Ltd

Distance to Downtown 1.3 km

Cargo Handled (tonnes, 2013) 435,000

Passenger Throughput (2013) 35,600,000

Aircraft Parking Bays 66

Aerotropolis Case Studies

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OutlookSensible and diversified positioning of Qingdao Jiaodong International Airport and its supporting functions will bring opportunities for the city’s development. The development of the new airport will not only promote Qingdao’s transportation infrastructure, but also the development of related industries. Despite lengthy planning and development periods, many globally recognised “aerotropolises” have eventually realised significant economic benefit from such initiatives.

Opportunities • Brand Effect: The announcement of the new airport will

undoubtedly attract industry leaders as well as domestic and international investors and developers to Jiaozhou.

• Logistics: High-quality logistics parks can effectively support integrated transport, storage and distribution processes, as well as provide professional logistics services for industrial development.

• Retail and Theme Entertainment: The new airport has the potential to drive regional development for diversified retail sectors, such as outlets, theme parks, and duty-free stores.

• Business Park: With the accessibility advantage of the airport, headquarters and special business parks will find more opportunities to develop.

• Hotel: Business hotels in the airport area can serve as a driver for tourism development to support the economy.

Suggestions • Industry Development Strategy: The government has

committed to prioritizing projects that can be achieved in the short term, are market-oriented, and promote the development of the new airport and overall related industries. At the same time, ample space for future projects should be planned, in order to protect all prime land resources from being inefficiently absorbed quickly. After all, the final purpose of the project is to build effective and sustainable development in the airport area.

• “Aerotropolis”: The “airport city” or “aerotropolis” should be planned strategically at an early stage in order to create a new urban form that is highly competitive, attractive and sustainable.

• Transportation Hub: A multi-modal transportation network will be crucial to the new airport becoming a reliable regional transportation hub.

Bai LuManaging Director, Qingdao lu.bai@ap.jll.com +86 532 6600 9559

Celia ChenAssistant Manager - Research, Qingdao celia.chen@ap.jll.com +86 532 6600 9595

About JLLJLL (NYSE: JLL) is a professional services and investment management firm offering specialised real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of USD 4.7 billion and gross revenue of USD 5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion sq ft (316 million sqm), and completed USD 118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has USD 53.6 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of JLL Incorporated. For further information, visit www.jll.com.

JLL has over 50 years of experience in Asia Pacific, with more than 29,000 employees operating in 81 offices in 16 countries across the region. The firm was named “Best Property Consultancy” in seven Asia Pacific countries at the International Property Awards Asia Pacific 2014. www.jll.com/asiapacific

In Greater China, the firm has more than 2,100 professionals and 13,500 on-site staff providing quality real estate guidance and services in over 80 cities across the country. Established in 2007, JLL’s Qingdao branch also works across Shandong province and surrounding areas to provide leasing, strategic consulting, and property management services in several cities, including projects in Jinan, Yantai, Weihai, Zibo, Rizhao, and Liyi. www.joneslanglasalle.com.cn

JLL offices in Greater China

Beijing11/F China World Tower 1 Jianguomenwai Avenue Beijing 100004, Chinatel +86 10 5922 1300 fax +86 10 5922 1330Chengdu29/F, Tower 1 Chengdu International Finance Square 1 Hongxing Road Section 3 Chengdu 610021, Sichuan, Chinatel +86 28 6680 5000 fax +86 28 6680 5096Chongqing2501A-2506 Metropolitan Tower 68 Zourong Road, Central District Chongqing 400010, Chinatel +86 23 6370 8588 fax +86 23 6370 8598GuangzhouRoom 2401-03, 24/F Main Tower Guangzhou International Finance Center No.5, Zhujiang Xi Road Tianhe District Guangzhou 510623 Guangdong, Chinatel +86 20 2338 8088 fax +86 20 2338 8118Nanjing8/F Asia Pacific Tower 2 Hanzhong Road Gulou District, Nanjing 210005 Jiangsu, Chinatel +86 25 6610 2688 fax +86 25 6610 2257

QingdaoUnit 2308 Tower A, COSCO Plaza 61 Hong Kong Middle Road Shinan District, Qingdao 266071 Shandong, Chinatel +86 532 8579 5800 fax +86 532 8579 5801Shanghai25/F Plaza 66, Tower 2 1366 Nanjing Road West Shanghai 200040, Chinatel +86 21 6393 3333 fax +86 21 6393 3080Shenyang1808 Office Tower, L’Avenue 10 Huigong Street, Shenhe District Shenyang 110013 Liaoning, Chinatel +86 24 3109 1300 fax +86 24 3109 1330ShenzhenRoom 2801-02, 28/F Tower Three, Kerry Plaza 1 Zhongxinsi Road, Futian District Shenzhen 518048 Guangdong, Chinatel +86 755 2210 0888 fax +86 755 2388 7600TianjinUnit 3509 The Exchange Tower 1 189 Nanjing Road Tianjin 300051, Chinatel +86 22 8319 2233 fax +86 22 8319 2230

WuhanUnit 3202-03 Corporate Centre 5 1628 Zhongshan Avenue Jiang’an District Wuhan 430014, Hubei, Chinatel +86 27 5959 2100 fax +86 27 5959 2144Xi’anUnit 2202-03 CapitaMall Office No.64 West Section of South 2nd Ring Road Yanta District, Xi’an 710065 Shaanxi, Chinatel +86 29 8932 9800 fax +86 29 8932 9801Hong Kong6/F Three Pacific Place 1 Queen's Road East Hong Kongtel +852 2846 5000 fax +852 2845 9117 www.jll.com.hkMacauUnit H, 16/F Finance and IT Center of Macau Nam Van Lake Quarteirao 5 Lote A Macautel +853 2871 8822 fax +853 2871 8800 www.jll.com.moTaipei20/F-1 Taipei 101 Tower No 7 Xinyi Road Section 5 Taipei 11049, Taiwantel +886 2 8758 9898 fax +886 2 8758 9899 www.jll.com.tw

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