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Why Changsha

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Land, factories and office buildings

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　Operating costs

Operating costs are key concerns for selecting plant or office locations. Compared with coastal cities in the east, Changsha has maintained its operating cost advantages.

There is an obvious economic location advantage with Changsha. It is a hinge to connect the inland to Guangdong & Guangxi Provinces, coastal areas in the east and the southwest boarder areas and it is also the joint part of the Yangtze economic belt and south China economic ring, enjoying the unique qualifications of conducting close economic and trading cooperation with two major economic regions. In recent years, Changsha has developed into a base to support developed regions along the coast and the Yangtze and a pilot city to promote development of inland and the west. It has become one of the major distributing centers for export of production factors including capital, product, technology, information and talents to the province, adjacent provinces in the southwest, Guangdong and Hong Kong and is playing a key role of connecting the east to the west and the south to the north in the national arrangement of economic strategy.

Land, factories and office buildings

Foreign companies may purchase Land Use Rights (LUR), but cannot own property outright
·.Foreign companies cannot own land in China. Land is accessed by paying a single fee to the local government in exchange for a LUR certificate, typically allowing 50 years of usage for industrial land

·Industrial zones have their own price schedules for LUR (actual prices are subject to negotiation with the specific zone)
—the reference price for LUR in Changsha National Economic and Technology Development Zone (“CETZ”) is USD 39 / ㎡
—the reference price for LUR in Changsha National High-Tech Industrial Development Zone (“CHTIDZ”) is USD 68 / ㎡ in the downtown area and USD 32 / ㎡ outside downtown

·According to current regulations, LUR are obtained through public bidding, auctions and public posting of available land

Steel-frame and concrete factories can be constructed in industrial zones(a)

·An indicative cost to construct a single storey steel-frame factory is in the range of USD 42 / ㎡to 85 / ㎡ (based on a floor area of 1,000㎡ and height of 8-15m, column-free)

·The cost to construct a three to six-storey steel-reinforced concrete factory is roughly USD 99 / ㎡ to 141 / ㎡ depending on the number of floors (based on a floor area of 1,000 ㎡ and height of 4-5m per floor)

·Pre-built factory space is also available for rent within industrial zones:
—annual rent for standard factory space varies from USD 25 / ㎡ to 30 / ㎡ depending on the location of the factory

Monthly rent for existing major office buildings (USD / ㎡ )
Office building	Rent (USD / ㎡)
First Boulevard Office Tower	6.7
Xiangyu Central Building	6.6
Shun Tian International Fortune	7.2
Overseas Chinese Building	5.1

Source: Changsha Municipal Bureau of Commerce

Compared with other cities,
the construction cost and rent for office buildings are quite low

Comparison of construction cost and rent office buildings
City	Construction cost (USD / ㎡)	Monthly rent for an office building (USD / ㎡)
Changsha	42-85	7
Hangzhou	50-80	21
Guangzhou	113-141	19
Shenzhen	N/A	18
Shanghai	113-127	37

Source: KPMG analysis

—a “standard factory” refers to a six-floor steel-reinforced concrete factory with a floor area of 1,000㎡, height of 4-5m, column-free

Note: (a) data on the construction cost and rent of factories is for CHTIDZ

High-end office building
·High-end office buildings are located in downtown Changsha, with convenient access to the airport and railway stations.
·Rent in these buildings is typically USD 0.23 / ㎡ per day, or around USD 7 / ㎡ per month, much lower than rental levels in Shanghai (USD 30/ ㎡ per month)