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Beijing Faces Post-olympic Dilemmas


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Beijing's Olympic building boom becomes a bust

Many buildings in the city's impressive skyline are empty.

By Barbara Demick

February 22, 2009

Reporting from Beijing — "Empty," says Jack Rodman, an expert in distressed real estate, as he points from the window of his 40th-floor office toward a silver-skinned prism rising out of the Beijing skyline.

"Beautiful building, but not a single tenant.

"Completely empty.

"Empty."

So goes the refrain as his finger skips from building to building, each flashier than the next, and few of them more than barely occupied.

Beijing went through a building boom before the 2008 Summer Olympics that filled a staid communist capital with angular architectural feats that grace the covers of glossy design magazines.

Now, six months after the Games ended, the city continues to dazzle by night, with neon and floodlights dancing across the skyline. By day, though, it is obvious that many are "see-through" buildings, to use the term coined during the Texas real estate bust of the 1980s.

By Rodman's calculations, 500 million square feet of commercial real estate has been developed in Beijing since 2006, more than all the office space in Manhattan. And that doesn't include huge projects developed by the government. He says 100 million square feet of office space is vacant -- a 14-year supply if it filled up at the same rate as in the best years, 2004 through '06, when about 7 million square feet a year was leased.

"The scale of development was unprecedented anywhere in the world," said Rodman, a Los Angeles native who lives in Beijing, running a firm called Global Distressed Solutions. "It defied logic. It just doesn't make sense."

Construction cranes jut into the skyline, but increasingly they are fixed in place, awaiting fresh financing before work resumes.

Boarded fences advertise coming attractions -- "an iconic landmark" or "international wonderland" -- that are in varying states of half-completion. A retail strip in one development advertised as "La Vibrant shopping street" is empty.

In a country where protests are rare, migrant workers stand in front of several construction projects, voicing their grievances.

"Our boss ran away with the money and he is nowhere to be found," said Li Zirong, a migrant worker from Shaanxi province, who was a supervisor on a stunning building with windows shaped like portholes.

What makes this boom-and-bust cycle different from those in the West is that there is no private ownership of land in China, making local governments de facto partners in the real estate industry, which earn huge fees from leasing and transferring land.

Huang Yasheng, an economist at the Massachusetts Institute of Technology, traces the blame for the bust to the Chinese Communist Party and its reluctance to allow a true market economy.

"The lack of land reform fed into the real estate bubble and now it's coming back to haunt them," said Huang, author of "Capitalism With Chinese Characteristics," published last year. "There should have been more checks and balances on the ability of the government to acquire land."

The government spent $43 billion for the Olympics, nearly three times as much as any other host city. But many of the venues proved too big, too expensive and more photogenic than practical.

The National Stadium, known as the Bird's Nest, has only one event scheduled for this year: a performance of the opera "Turandot" on Aug. 8, the one-year anniversary of the Olympic opening ceremony. China's leading soccer club backed out of a deal to play there, saying it would be an embarrassment to use a 91,000-seat stadium for games that ordinarily attract only 10,000 spectators.

The venue, which costs $9 million a year to maintain, is expected to be turned into a shopping mall in several years, its owners announced last month.

A baseball stadium that opened last spring with an exhibition game between the Dodgers and the San Diego Padres, is being demolished. Its owner says it also will use the land for a shopping mall.

Among the major Olympic venues, only the National Aquatics Center, nicknamed the Water Cube, has had a productive afterlife. It's used for sound-and-light shows, with dancing fountains in the swimming lanes where Michael Phelps won his gold medals.

All around the Olympic complex, there are cavernous empty buildings, such as the main press center for the Games, that still await tenants.

A shopping arcade that stretches for a quarter of a mile across the street from the complex is empty, the storefronts papered over with signs reading "famous stores corridor."

"They wanted to build 'the world's biggest this' and 'the world's biggest that,' but these buildings have almost zero long-term economic benefit," economist Huang said.

Moreover, the makeover of Beijing for the Olympics led to an estimated 1.5 million residents being evicted from their homes, according to the Geneva-based Center on Housing Rights and Evictions.

In this vibrant capital city of 17 million, there is an insatiable demand for housing, yet prices remain far out of reach of most residents. American-style free-standing homes are being advertised for more than $1 million in gated communities with names like Versailles, Provence, Arcadia and Riviera. Within the Fourth Ring Road, a beltway that defines the central part of the city, two- and three-bedroom apartments are offered for $800,000 in compounds named Central Park and Riverside.

"These are like New York prices, but we are Chinese. We don't have that kind of money," said Zhang Huizhan, a 55-year-old businessman who owns a Chinese furniture factory. He has been looking for five years for an apartment for him and his wife within their budget of $150,000.

The average salary in Beijing is less than $6,000 a year.

Louis Kuijs, a senior economist at the World Bank in Beijing, said a lack of government supervision of the real estate industry tempted developers to build only for the luxury market and to ignore the mass market.

"If you think demand is endless for anything you build and you have just 200 square meters of land, you will build high-end apartments to make the highest profit," Kuijs said.

To its credit, the government recognized in 2007 that the real estate market was headed toward a bubble, economists say. In an attempt to make real estate more affordable, restrictions were introduced on ownership of second homes and on foreign home buyers. But the measures came too late, accelerating the crash of an already weakening market.

The Beijing Municipal Bureau of Statistics reported this month that housing sales in the city dropped 40% last year. Chinese economists have predicted that housing prices will drop 15% to 20% in Beijing this year. Shanghai has experienced a similar decline.

"You can look at this perhaps as a healthy correction in the market," Kuijs said.

In the longer term, he said, "China's urbanization and overall development is going to lead to a very large additional demand for housing in the city."

Before that happens, the situation could get worse. Most of the real estate has been financed by Chinese banks, which have avoided writing down the loans. Eventually, they will be forced to, and that probably will have a ripple effect throughout the economy.

"At the end, somebody is going to have to pay the piper," real estate expert Rodman said.

barbara.demick@latimes.com

Nicole Liu and Eliot Gao of The Times' Beijing Bureau contributed to this report.

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Actually, it was apparent back in 2004-2005 from the projects under construction and in planning, that there was a huge bubble in the making, and now that has come home to roost. It's just another form of that amazing Chinese propensity to build massive overcapacity in every industry they touch...real estate, steel, autos, textiles, cigarette lighters, etc. The reality is, China is NOT really a market economy, and absolutely huge fortunes are made by collusion between gatekeepers of resources and regulations (govt) with relatively few individuals/families/tycoons with capital...and with the privilege to access a bottomless pit of state-owned bank funding. Too many office buildings, too much retail, too many upscale hotels (well OK, minus one since the recent TVCC fire which consumed the soon-to-be Mandarin Oriental), too much luxury housing. And now not anywhere close to enough demand, maybe for years to come. Most of the subject of this article and the general situation had NOTHING to do with the hosting of the Olympics, although some already-planned infrastructure projects (airport T3, subway lines, etc) had their timetables accelerated for pre-Games completion. The infrastructure projects were sorely needed, Olympics or not, and BTW are still continuing.

So the headline of the article is a bit misleading--you simply can't blame Beijing's overdevelopment woes on receiving the Games, nor tag the departure of the Olympic roadshow as the cause of the bust-in-progress. With respect to the Olympic facilities: excluding the temporary venues which will come down, and the Birds Nest which is a flaming White Elephant no matter what kind of spin you want to put on it, most of the other permanent structures are actively in use. Others--such as Wukesong Arena, Water Cube, Press/Convention Center--with proper facilities marketing and management, could be heavily utilized. (Although please God no, not another shopping center :o ) Unfortunately, good facilities marketing and management is not a Chinese strong suit, at least not mainland Chinese. I suspect (hope?) that most bid cities for future Games have this issue more competently and proactively sussed out well in advance.

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Bird's Nest Holds 1st Post-Games Show

BEIJING, May 2 -- It was like another Olympics had come home to roost at the Bird's Nest.

Friday night, as the stadium hosted the Jackie Chan and His Friends Concert in front of a 50,000-strong audience. It was the first major public event since the Games ended more than eight months ago.

"The Bird's Nest is a legend, so is Jackie Chan. You don't see this stardom combination often," said Xue Dong, a 40-year-old visitor from Panjin, Liaoning province, who was wearing the white cap of a tour group that arrived in Beijing on Friday morning

The architectural wonder experienced the stunning Olympic opening ceremony, record-breaking sprinter Usain Bolt and a jaw-breaking withdrawal of hurdler Liu Xiang. But hours before its first major post-Olympic event, it still saw Chinese families, couples and foreigners, among thousands of other tourists, refreshing their memories of the Olympics.

Vendors were selling replicated "jade in gold" Olympic medals and Olympic venue crests at 10 yuan ($1.5) per piece in front of the giant structure.

Stadium a new Great Wall

"The Bird's Nest has become a new Great Wall, a new Forbidden City for Beijing and China," said Zhang Hengli, the brains behind a Beijing-based company which runs the 80,000-seat structure - which is big enough to become a literal "white elephant" if not properly maintained.

Its size has always been the beauty and shortcoming of the stadium.

The stadium consistently attracts 20,000 to 30,000 visitors per day, and a lot more on public holidays. But it also costs 70 million yuan yearly to maintain, not to mention the 90 million yuan in annual interest payments.

"To nest profits for it, we must commercialize," Zhang told China Daily, adding that he was not worried about the stadium's future with further sponsorship still underway.

Media have speculated that Olympic sponsors Coca-Cola and Adidas are both interested in the bid.

The stadium is set to host a joint concert next month by Placido Domingo and two of China's most popular artists.

Also, promoters of a stadium-sized Turandot by Olympic ceremony director Zhang Yimou and Italian Cup organizers who want to play their final in the Bird's Nest, are both fighting for a spot on the one-year anniversary of the Beijing Olympics, which falls on Aug 8.

All of the 37 Olympic venues have opened to the public, some for commercial purpose. Next to the Bird's Nest, the National Indoor Stadium earlier staged music diva Sarah Brightman and piano sensation Lang Lang.

The Shunyi Olympic Rowing-Canoeing Park in the suburbs of Beijing opened to the public for 20 yuan per head. Venue director Gao Jiadong said the park will first attract the public before becoming a commercial water theme park.

Visitors seemed confident about the fate of the venues.

"The Eiffel Tower was considered a useless steel tower when it came out one century ago, but now it is world famous," said Koenig Eugene, a visitor from Strasbourg, France, before entering the Bird's Nest on Friday with his relatives in Beijing.

"It's the same case. This piece here will become another wonder for the next 200 years," said tourist Woehl Hubert.

(Source: China Daily)

http://news.xinhuanet.com/english/2009-05/...nt_11297421.htm

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Soccer-Beijing's Bird's Nest to host Italian Super Cup

MILAN, June 9 (Reuters) - The Italian Super Cup will be played at Beijing's Bird's Nest stadium on August 8, the Italian League said on Tuesday.

Officials had already announced the match between league champions Inter Milan and Italian Cup winners Lazio would be held in the Chinese capital but it has now been decided to use the Olympic Stadium after weeks of uncertainty.

The pre-season curtain raiser will kick off at 8 p.m. Chinese time, eight minutes short of a year since the Olympic Opening Ceremony started in the distinctive stadium.

"The date and time assume an important significance which has been recognised by the Italian league and Italian football," a statement said.

Italian soccer chiefs are playing the game abroad in a bid to increase global interest in Serie A, which has suffered in comparison with the English and Spanish leagues in recent years.

The sale of AC Milan's Kaka to Real Madrid on Monday was another blow to the status of the Italian league.

The Super Cup was due to be played in the United States last year but the plan fell through. It has previously been hosted in the U.S. and Libya.

LINK: http://ca.news.yahoo.com/s/reuters/090609/..._italy_supercup

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The Race Of Champions Moves To Beijing’s Bird’s Nest Stadium

- The Race of Champions 2009 to become first international sports event to take place in China’s national stadium since 2008 Olympic Games

- Event date moved to early November, immediately after Abu Dhabi Grand Prix

The Race of Champions - the ultimate end-of-season motorsport battle – will become the first international sports event to be staged at China’s national stadium since the 2008 Summer Olympics when it takes place on November 3-4, 2009.

The “Bird’s Nest” stadium will host the event, which moves from Wembley after a two-year run at England’s national stadium and three years at the Stade de France in Paris. The 2009 event, which will start just two days after the Formula 1 season reaches its climax in Abu Dhabi, will move from a weekend to a midweek event for the first time.

The event will be staged over two days, with the ROC Nations Cup on Tuesday, November 3 and The Race of Champions on Wednesday, November 4, to offer spectators a more extensive exhibitions line-up, plus the possibility of more competitors and teams than ever before.

Speaking about the move, Fredrik Johnsson, President of Event Organisers IMP, enthused, “we received exciting proposals from five world-class stadia, but after the incredible Olympics last year, Beijing’s candidacy was difficult to ignore. The Bird’s Nest venue is awesome and having spent the last five years at two of Europe’s biggest stadiums, we were thrilled about the opportunity to take The Race of Champions to Asia for the first time, to another of the world’s most iconic sporting arenas.”

Mr Li Jianyi, General Manager of Great Gate, managing company of the Bird's Nest, said of the agreement: “Following last year’s Olympics, we now possess one of the world’s best sporting stadia and will continue to stage elite international sporting competition in Beijing. We are very excited about The Race of Champions coming. The stadium has already hosted the world’s fastest athletes; now it will host the world’s fastest racers.”

"We would like to thank the Beijing Sports Bureau, the Federation of

Automobile Sport in China, Great Gate and Sportsunite for making it possible

for The Race of Champions to become the first major international sporting

event in The Bird's Nest after the Olympic Games."

"I would also like to say thank you to Wembley for the past two years,”

Johnsson continued. “The people there were great to work with and helped us

put on two fantastic events. This year will be the Race of Champions’ first

year outside of Europe, but we will definitely be back soon.”

Last year’s Race of Champions attracted the most successful ever drivers from Formula 1 (Michael Schumacher), World Rallying (Sebastien Loeb), the Le Mans 24 Hours (Tom Kristensen), and World Touring Cars (Andy Priaulx), as well as F1 race winners Jenson Button, David Coulthard and Sebastian Vettel, plus Triple World Superbike Champion Troy Bayliss. Others to have competed in the past include Valentino Rossi, Fernando Alonso and Colin McRae.

LINK: http://www.raceofchampions.com/media/press-releases/92/

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  • 2 weeks later...

From The China Daily:

Olympic landmarks hosting games and more

By Chen Jie (China Daily)

Updated: 2009-06-25

Fears that the Bird's Nest and the Water Cube would turn into white elephants, sucking in millions for maintenance, have faded after stakeholders lined up an array of events and attractions to keep the iconic venues alive and active.

Sandwiched between Jackie Chan's gig on May 1 and Zhang Yimou's arena production of the opera Turandot in October, Chinese soprano Song Zuying and pop star Jay Chou will join hands with star pianist Lang Lang and great tenor Placido Domingo on June 30 for Charm of China - Bird's Nest Summer Concert.

A brand-new production of Swan Lake debuts next door at the Water Cube on Friday. And in the next two months, ballerinas and synchronized swimmers from Russia and France will perform a show specially produced for the venue.

A series of water concerts have been staged since last October and Beijing Children's Art Theatre performed its latest production, Legend of Beijing, during the Children's Day holiday.

The post-Olympic use of Beijing's venues was a hot debate even before the Games started last August. The Bird's Nest cost about 3.5 billion yuan ($425 million) and the annual operation and maintenance bill is estimated to be more than 170 million yuan.

Turning the stadium into a commercially successful venue for major sports events, high-profile performances and other long-term needs of the community was seen as a challenge.

Naming rights or a lucrative corporate sponsorship would have been easy options. Insiders revealed that Adidas had offered 70 million yuan for naming the stadium after the sports goods giant, but Yang Weiying, deputy general manager of Beijing CITIC Consortium Stadium Operation Co Ltd, which has a 42-percent stake in the venue and management rights for 30 years, said: "We are not going to sell the right to name the Bird's Nest now.

"The Bird's Nest is a symbol of national pride. It showcased Chinese people's dreams and achievements during the Olympic Games.

"People may feel uncomfortable seeing a company label attached to the venue."

There have also been reports that Beijing Guo'an soccer club could move to the Bird's Nest to play home games because CITIC Group sponsors the club.

But Yang said it was a "mission impossible" for a Chinese Super League club to raise gate revenues or sponsorship for the move.

Yang said the Olympic venues have been developed on four main fronts: Tourist attractions, hosts of high-profile sports and entertainment events, to showcase the Games legacy and provide commercial services.

After the Olympic Park opened to the public last October, the Bird's Nest and the Water Cube have become huge draws. According to Wang Chun, deputy director of the managing committee of the Olympic Park, the Bird's Nest has received more than 4 million tourists and earned some 210 million yuan while the Water Cube has been visited by more than 2 million and raked in 80 million yuan.

"It's amazing for any single destination in the world to receive so many tourists in such a short time. But we are still thinking of ways to develop it into a more friendly multi-functional park. During the National holiday, some 80,000 tourists visited the Bird's Nest but now the number has declined to 5,000 to 6,000 per day. So we must improve the facilities and create new attractions."

Zhang Hengli, deputy general manger of National Stadium Co Ltd, said the Bird's Nest will present carnivals and demonstration of breath-taking adventure sports in the day while hosting mega sports events or blockbuster shows after dark.

On Aug 8, Italian League Champion Inter Milan and Italian Cup winner Lazio will compete for the Italian Super Cup at the Bird's Nest. It will be the first major international sports event there since the 2008 Olympics and will be followed by the Race of Champions in November. Pitting champions and leading drivers from the world of motor sport, the event was held in London's Wembley Stadium in the past two years. Michael Schumacher and Sebastian Vettel have confirmed their attendance to defend Germany's National Cup glory in the annual race.

"We will carefully select the events and make it a world-class arena hosting high-profile national and international events," said Zhang.

"We not only rent out the venue but are also involved in producing and organizing events. We are co-organizers of Charm of China - the Bird's Nest Summer Concert and will make it an annual highlight event in Beijing's culture calendar. In addition to Turandot in October, we will produce other shows to mark New China's 60th anniversary."

The Bird's Nest and Water Cube will be redeveloped after the National Day holiday in October. Restaurants will open on the second and third floors of the Bird's Nest stadium while the Water Cube will be turned into an entertainment complex with cinemas and restaurants.

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Well, the Water Cube's warm-up pool opened to the public for a fee recently and the main competition pools have been hosting a mix of light / fountain shows and musical concerts since last fall:

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As posted above a production of "Swan Lake" with synchronized swimmers will reportedly open soon at the Water Cube. And as it's always been planned, there is space for a water park in the venue's future development:

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Soccer-Beijing's Bird's Nest to host Italian Super Cup

MILAN, June 9 (Reuters) - The Italian Super Cup will be played at Beijing's Bird's Nest stadium on August 8, the Italian League said on Tuesday.

Officials had already announced the match between league champions Inter Milan and Italian Cup winners Lazio would be held in the Chinese capital but it has now been decided to use the Olympic Stadium after weeks of uncertainty.

The pre-season curtain raiser will kick off at 8 p.m. Chinese time, eight minutes short of a year since the Olympic Opening Ceremony started in the distinctive stadium.

"The date and time assume an important significance which has been recognised by the Italian league and Italian football," a statement said.

Italian soccer chiefs are playing the game abroad in a bid to increase global interest in Serie A, which has suffered in comparison with the English and Spanish leagues in recent years.

The sale of AC Milan's Kaka to Real Madrid on Monday was another blow to the status of the Italian league.

The Super Cup was due to be played in the United States last year but the plan fell through. It has previously been hosted in the U.S. and Libya.

LINK: http://ca.news.yahoo.com/s/reuters/090609/..._italy_supercup

What a waste celebrating the first anniversary of the hugest Olympics ever with such a low profile event. They really couldn't stage anything better for the occasion? :huh:

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What a waste celebrating the first anniversary of the hugest Olympics ever with such a low profile event. They really couldn't stage anything better for the occasion? :huh:

One would think the Chinese wouldn't be celebrating 8/8 with that event, but elsewhere in the city.

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