While the public becomes increasingly enthusiastic about the Olympic Green project, experts worry an oversupply of Olympic properties will create a real estate glut after the 2008 Games.

"Without serious marketing plans or a proper development process, Olympic properties are very likely to face strong challenges in the market ... when the Beijing Olympic Games are over in 2008," said Li Xueyan, chief analyst with BA Consulting, the largest domestic real estate consultancy firm in Beijing.

Li's remarks followed the international competition for Beijing's Olympic Green, in which a design produced by US designer Sasaki Inc and Tianjin-based Huahui Designing Company received an award.

Eighty-nine designs were entered in the competition.

The initial commercial development plan for the facilities following the Games was also announced at that time by Shan Jixiang, director of Beijing's City Planning Commission.

When asked last week by members of Beijing People's Political Consultative Conference, Shan said the Olympic Green will have more than 800,000 square metres of commercial facilities - including 100,000 square metres in non-profitable Olympic venues.

The 470,000-square-metre Olympic Village, the primary component of the Olympic Green, will be sold and 400,000 square metres of exhibition facilities will become commercial properties.

The Olympic Village will house the athletes during the Games.

But marketing the Olympic Green properties after the Games could have a huge impact on the real estate sector in north Beijing.

"The market might not absorb such a big supply in a short time," Li told Business Weekly.

Lingering lessons

The experts' concerns are not baseless.

Celebrity Plaza - the largest, aborted real-estate project in Beijing - is a focal point of the Asian Games Village.

The failed project reminds developers of potential investment traps.

There have been numerous business development failures in recent years in the area around the Asian Games Village.

The facility had been designed to be a business hub in north Beijing, but it developed into a residential area.

But some are optimistic the Olympic Green will be more successful, as north Beijing is developing faster than other areas of the city. "When the Asian Games Village was constructed in the 1980s, the area was largely untapped. There were large arable fields," Li said.

Urbanization - including widened roads, construction of light rail lines and expanded green areas - in the area may give the Olympic Green an advantage.

A total of US$1.65 billion will be used to construct 37 venues and 58 rehearsal sites for the 2008 Olympic Games with 32 venues located in Beijing.

A dozen real estate developments - most recording high sales - have begun around the Olympic Green since July 2001 when China was chosen to host the 2008 Olympic Games.

However, the rising number of new developments in the area could make it harder to fill the Olympic properties after the Games.

"In competing with developments within the Olympic Green, developers outside the Green are more flexible and they can seize market opportunities sooner," Li said.

Her opinion was echoed by Kai Yan, vice-general architect of China Academy of Architectural Design and Studies.

Kai predicts the Olympic properties will pose challenges for Beijing's real estate developers.

Other challenges

Some experts argue residential projects neighboring the Olympic Green might have little impact on the Olympic properties, which will be used mainly for businesses.

However, real estate markets in other areas of Beijing could affect business properties in the Olympic Green.

Officials from the Beijing Organizing Committee of the 2008 Olympic Games said no final plan had been worked out and declined further comment on the pending marketing competition.

Wang Wei, secretary-general of the committee, previously said such competition could not be avoided when developing the Olympic facilities.

"The competition the Olympic properties will face is certainly stronger than what the Games organizers predict," suggests Yi Jiandong, sports economist with Beijing University of Physical Education.

Yi, who is now studying Olympic marketing strategies in Sydney, said few of the Games organizers have real marketing experience.

Beijing's Central Business District (CBD) will develop 5 million square metres of high-quality office buildings before the Olympic Green is unveiled.

That could suffocate business development efforts in other parts of Beijing.

Some real estate analysts believe strong competition from areas such as CBD prevented the Asian Games Village from developing a business centre.

Meanwhile, the China International Exhibition Centre (CIEC) could affect the Olympic exhibition facilities.

CIEC recently changed its decision to construct its exhibition complex in the Olympic Green in favour of east Beijing.

"The Olympic Green could only offer us 400,000 square metres, while our currently proposed complex will reach 2.3 million square metres," Liang Wen, vice-president of CIEC, told Business Weekly.

CIEC's complex is expected when completed in 2006 to capture most of the exhibition market, challenging the Olympic Green.

Prudent development

Li suggests Olympic Green developers must be cautious to cope with the situation.

"They should absorb the experiences and lessons from other Olympic hosting countries," she said.

Yang Hongbin, an architect who helped draft the award-winning Olympic Green design, said economic considerations were factored into the plan.

"We would not pursue luxury or landmark effect at the expense of rising construction costs," Yang said.

Experts, however, still worry organizers might spend too much on developing luxury Olympic properties that may remain vacant.

Li said one concern is Olympic Green planners and developers might be predominantly State-owned businesses known for exorbitant spending.

The 1.2-billion-yuan (US$144-million) Beijing Universiade Village, constructed to host last year's 21st Universiade, is one such example.

Estimates indicate it will take the Universiade developer, State-owned Beijing Tianhong Group, at least 50 years to recover its investment, according to sources from the group.

"To avoid the reappearance of the Universiade Village, Olympic developments should be based on market principles and experienced foreign sports-related developers should be introduced," Yi suggested.

(Business Weekly August 13, 2002)