Features

Shanghai exposed

1 Jul 2010 by AndrewGough

China’s World Expo is primarily a draw for tourists, but business travellers will feel the benefits too. Alex Frew McMillan reports

The crowds have been flocking to Shanghai since it threw open the doors to its World Expo at the start of May. The event runs until the end of October and is expected to draw 70 million visitors. It’s not quite running on track, with eight million through the gates in the first month, but hordes of Chinese tourists are likely to converge on the site over the summer.

Already the crowds have posed for pictures beside a waxwork of England footballer Wayne Rooney, on loan from the local Madame Tussauds. The model was a temporary “visitor” in front of the UK pavilion, a £25 million pin cushion-like structure dubbed the “Dandelion”. Its metal and glass design echoes the Crystal Palace, built for the first World Expo (the Great Exhibition) in 1851, but this edifice has nature at its heart – it contains 60,000 seeds in each of its transparent acrylic rods.

Elsewhere, the crowds have marvelled at Nepal’s recreation of Kathmandu and Japan’s 5,500 sqm “purple silkworm island”, and sneaked a peak at the first-ever pavilion from North Korea – that presents a “prosperous and modern Pyongyang”, according to the propaganda, “where education, science, culture and sports have achieved great development”.

The pavilions are designed to inspire, educate and influence. The host country’s, naturally, cost the most, at US$220 million, and at 63 metres is the tallest, towering over the site like a giant red Chinese crown.

But when the Expo ends and the tourists leave, the bulk of the pavilions will be dismantled. Of much greater long-term significance to Shanghai is the lasting legacy of infrastructure improvements, city planning and urban renewal that the event has encouraged. That’s not to mention the jolt that has been given to the five-star hotel industry, luxury retail and a host of other service industries.

“It’s what comes after the Expo that will be the legacy rather than the event itself,” says Anthony Couse, managing director of the Shanghai office of real-estate services firm Jones Lang La Salle. “The Expo was the forerunner to get the infrastructure put in by the government. It’s a bit like the effect the Olympics can have.”
With an official cost of US$4.2 billion merely for the site and its operations, the Shanghai event is the most expensive World Expo yet held. It is also the largest, spanning 5.3 sq km on both banks of the Huangpu River, an area south of the centre of town that previously housed run-down docks, shipping operations and a Thyssenkrupp steel factory, which has been moved.

The theme is “Better City, Better Life”, with an overarching aim of examining how to improve urban environments. Many of the pavilions latch on to that concept, promoting green technology and renewable materials, as well as highlighting ways to minimise ecological impacts.

In keeping with that theme, most of the greenery on the site will remain as parkland. Much of the rest will be auctioned off for development, mostly for residential real estate but also some retail and office space, while the Pudong side will retain a conference centre.

As with Beijing’s Olympics, the Expo itself has made life more difficult for some industries, temporarily. There is a ban on new construction in a large area stretching from the Expo site to the Bund and city centre, with wider restrictions on pile driving and demolition work, to try to keep the city spruced up for the millions of visitors.
Still, the huge spending on infrastructure has made it a more manageable place to live and visit. Perhaps only in China’s command-driven system – overseen by a Communist Party leadership that’s top-heavy with engineers – can such investment occur. “Over the past two years, the scale and pace of infrastructure development in Shanghai surpasses anything else the world has ever seen,” is the grand assertion of a Jones Lang La Salle report.

As of its 2008 budget, the Shanghai government had budgeted 500 billion yuan (£50 billion) in infrastructure spending on the city through 2010. Then it awarded another 150 billion yuan (£15 billion) in conjunction with the central government’s stimulus response to the financial crisis.

Shanghai won the right to host the Expo in 2002. Since then, it has set about an ambitious expansion of its metro system. A city that had only three lines in 2005 had 12 by the time the Expo opened, and more than 420km of track. The long-term plan calls for 22 lines by the end of 2020, covering 877km, which would make the system one of the longest in the world.

The investment in the metro has effectively made the city bigger. Unlike Western cities that have built up extensive suburbs over 150 years of industrialisation, Shanghai is only now making it a viable option to live far from the centre of town unless you’re willing to put up with long bus rides every day.

The Expo site itself is a good example. The former dockland had fallen into neglect, too far to be easily reached, but is now connected straight to downtown on the subway. “It’s not prime downtown but it’s very accessible, within 30 minutes of the central business district, which was unthinkable before the subway was in place,” Couse says. He notes that the metro expansion has taken traffic off the roads, improved commuting conditions and made suburban parts of the city viable options for living, shopping and recreation. Companies are also likely to relocate, with the tiny figure of Grade A office space outside the centre of Shanghai – only at 331,000 sqm in 2009 – likely to boom. It should hit 1.8 million by 2013, Jones Lang La Salle predicts.

The city has transformed Hongqiao, site of the domestic airport, with an adjacent transportation hub. This will be the transfer point for all the means of transport coming into Shanghai, connecting intercity and express trains with the metro, the Maglev to Pudong airport, the high-speed train network, long-distance buses, urban buses, and what’s now called Hongqiao International airport. In March, it opened a second terminal, with expanded domestic services as well as international flights.

China’s expanding network of high-speed trains offers some serious competition to air travel. It already links Shanghai with Nanjing, a service that started in May 2007. A bullet train capable of reaching 380km per hour is due to start on this route in July. Similarly fast trains are due to begin running from Shanghai to Beijing and Hangzhou in 2011, effectively hooking up the three economic powerhouses of the Yangtze region with Beijing’s Bohai Bay area to the north.

“Shanghai is becoming a hub within the region, with Hongqiao slated to become a main transportation artery seamlessly connecting the airport and the national high-speed train network,” says Paul Tchen, general manager of the recently opened Peninsula Shanghai hotel (see below). “This will give access to Shanghai from anywhere in China.”

The Peninsula is located on the Bund, which has also been revitalised. The riverfront promenade reappeared this spring after 33 months of renovation and is now a 35-metre wide, 2km long pedestrian walkway. Traffic from what had exploded into an 11-lane highway has been diverted underground, so only six lanes remain on the surface. The walkway is greener and more pleasant thanks to the planting of hundreds of trees and the addition of 2,000 seats.

Peninsula is one of several hotel chains that have recently opened or are planning to do so. The opening of some has been timed to coincide with the Expo, while others have been driven by the city’s rising importance on the global stage. In 2010 alone, more than 7,500 rooms from internationally branded hotels are due to be added in the city, according to a Jones Lang La Salle forecast.

Perhaps wary of Beijing’s experience, which saw terrible occupancy numbers in 2009 after the Olympics and as the global financial crisis hit, hoteliers have not rushed in purely because of the Expo. But they see Shanghai as a cultural, financial and business hub for China so had intended to head to the city at some stage anyway, with the Expo providing a good entry point for a few.

Matthew Jung, director of marketing in the Asia-Pacific region for W Hotels, says: “Shanghai’s importance as the ‘new China connection’ or the gateway into China has been around for quite some time.” He thinks the activity “is a bit less of a direct correlation to, or influence of, the Expo, and more just the overall significance of Shanghai as a global trade city.” W is working on its first hotel in Shanghai, due to open in 2013, following on the heels of properties in Hong Kong and Guangzhou. It hasn’t rushed to go to Shanghai but feels it needs to be there.

“We like to operate in places where we can cater to the local design, music and fashion influencers as well,” Jung says. “We very much cater to the business community, but the other huge facet of the W brand is the lifestyle element. It’s hard to find a city that encompasses that [more than] Shanghai.”
Roland Jegge, vice-president of Worldhotels, visited Shanghai in the first two weeks of the Expo and felt a definite spillover into other industries, particularly creative ones.

“There was a fantastic buzz, and there was so much happening in fashion and the arts,” Jegge says. “It will add to Shanghai becoming the centre of the world.”
Still, many observers question such hyperbole. Given capital constraints and China’s ever-changing regulatory picture, there’s some doubt over its aim to be the country’s financial centre by 2020 – particularly when Hong Kong already holds that crown. Shanghai-watchers note it has been better at attracting manufacturing industries that open factories in the Yangtze River basin.

The hotel industry has also been under strain. The average revenue per room hit 1,200 yuan (£119) in 2005 but had fallen to just half that level by 2009. So all eyes are on the Expo to spur demand. Occupancy for Shanghai’s five-star hotels was only 54 per cent before the Expo started, according to DTZ Research, part of global real-estate adviser DTZ, and only 51 per cent for four-star properties.

Expect some deals when the Expo ends, then, which might make it a perfect time to do business travel to the city. Shaun Brodie, head of east China research at DTZ, says: “Post-Expo you might get a bit of over-supply in the market, so you might see average room rates coming down a bit.”

The results of past Expos have not been good – they have rarely made a profit. Shanghai hopes to be an exception, as one of the first developing nations to host the show, and estimates the Expo will generate up to 1.5 trillion yuan (£150 billion), one-third of it after the event ends.

The event has certainly given other industries a deadline to meet. That’s particularly true in retail, where many shopping centres have been overhauled and redeveloped, and plenty of new ones have been built. In contrast to hotels, Brodie says the high-end retail sector is enjoying occupancy rates of 90 per cent to 100 per cent in Shanghai, thriving off China’s boom in consumer spending.

Property developers planned ahead, and developments such as Shanghai IFC, Lippo Plaza, Hong Kong Plaza and Metro City opened in the run-up to the event. The Shanghai IFC has a new Ritz-Carlton hotel, plenty of serviced apartments and a 110,000 sqm mall.

Shanghai’s proponents hope the Expo and the investment that has preceded it will give the city the development push it needs. It has already changed the face of the city, and perhaps its fabric. “As much as the Beijing Olympics was China’s coming out party, this is Shanghai’s coming out party,” Couse says. “The city feels completely different.”

 

Expo facts and figures

? The World Expo takes place every five years and lasts for six months.
? The first Expo happened in 1851 in London, showing off the industrial power of Victorian England.
? The Shanghai Expo runs from May 1 to October 31.
? It is expected to draw 70 million visitors.
? The official bill runs to US$4.2 billion for the site and its operation.
? The site covers 5.3 sq km on both banks of the Huangpu River.
? Some 192 countries and 50 organisations are taking part.
? The mascot, Haibao, who looks like a blue tooth, is based on the Chinese character “ren”, which means “people”.
? There are 172,000 local volunteers and another 1.97 million volunteering around Shanghai.
? The next World Expo will run from May 1 to October 31, 2015, in Milan.

 

New hotels round-up

? The Peninsula Shanghai opened in October last year. Although new, the 235-room hotel has art deco touches and is right on the Bund. There’s also a 7,000 sqm shopping arcade next to the lobby devoted to luxury brands. Visit peninsula.com

? The art deco Peace hotel, right on the riverfront in the middle of the Bund, is being redesigned by architects HBA/Hirsch Bedner Associates and is due to reopen in September as the Fairmont Peace Hotel Shanghai. The famous Jazz bar will return, and the revamped hotel will have 256 rooms and suites. Visit fairmont.com

? The first building of the Waldorf Astoria on the Bund Shanghai is due to open this summer with 20 suites, occupying what was the Shanghai Club, at No 2, the Bund, and retaining many of the period features. The second building, a 249-room tower, will follow in the last quarter of the year. It’s the first Asian hotel for the Waldorf Astoria brand. Visit waldorfastoria.com

? Yue Shanghai opened in the spring and is close to the Expo site near Century Park in Pudong. Most of the 264 bedrooms have balconies overlooking the park, and the hotel has a modern Asian style, with all the high-tech frills you’d expect. Visit yueshanghai.com

? The Grand Central Hotel Shanghai opened last October near the pedestrian walkway on Nanjing Road in Pudong. The 353-room hotel is French in style and is perhaps best known for its glitzy ballroom, which sits above the lobby. Visit worldhotels.com

? The Waterhouse at South Bund is a 19-room boutique hotel that opened in April, on the banks of the Huangpu River near the Shiliupu docks in Puxi. A member of Design Hotels, it has a 743 sqm “event warehouse” next door that can seat 500 guests for banquets. Visit waterhouseshanghai.com, designhotels.com

? The 380-room Regal Jinfeng hotel opened in November in Pudong’s Jinqiao Export Processing Zone, a little further inland from the river, and has three restaurants, a bar and a patisserie. Visit regalhotel.com

? The five-star Guoman Shanghai opened in May. The 442-room property forms part of Guoson Centre Changfeng, a mixed-use development in the Putuo district in the north-west of the city. Features include three restaurants and a 750-capacity grand ballroom. Visit guoman.com

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