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Recession & Recovery

Global Report: China

Architects Hope to Benefit from Stimulus Package

[ Page 2 of 8 ]

By Alex Pasternack

Correction appended April 3, 2009

Despite hopes that the casino business would weather the economic storm, almost all building sites in Macao have gone quiet—a stark reminder that not even China is immune to the impact of a global recession. “We look at this crisis with shock and horror,” says Keith Griffiths, Asia and Middle East chairman of Aedas. The firm recently halted work on its projects on Macau’s formerly booming Cotai Strip, including the Four Seasons Hotel and new phases of The Venetian mega-casino. Like other foreign firms operating in China, Aedas—which had projects in Macau comprising some 50 million square feet—has laid off 30 of its 800 Hong Kong–based employees and contemplated salary cuts. Other firms with offices in Hong Kong and China have laid off 25 percent of their staff.

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On the mainland, the economy has slowed down, too, but the nation’s GDP is expected to grow 6 percent in 2009. To keep the economy humming, the government announced in November a $586 billion stimulus package. As a result, foreign firms are leaning on China more than ever, seeking everything from renovation and interior jobs to public projects. For instance, while the Berlin office of von Gerkan Marg and Partner (GMP) has taken a serious hit, work has remained stable at its Chinese branches, thanks to a raft of public projects, including a new train station in Shenzhen and a 22,000-seat aquatic center in Shanghai. “Some of our clients are in trouble,” says GMP’s Stephan Rewolle about its China work, “but overall we’re still much better off than the companies we compete with. But it’s hard to know how deep this will go.” And Aedas has made up for some of its losses in Macau with projects such as a high-speed rail link between Hong Kong and the mainland and work on the West Kowloon Cultural District in Hong Kong.

Though construction was temporarily ceased on one of Skidmore, Owings & Merrill’s large projects in Guangzhou, and the firm is laying off people in the U.S., it hopes to find more work in China. Its Shanghai office had planned to add office space, but is now merely holding steady. “Six months ago we were turning down work,” says Silas Chiow, SOM’s China director. Chiow, who moved to Asia from the U.S. during the recession of the early 1990s, sees some silver lining ahead. Cheaper land, labor, and materials, coupled with relaxed policies could help the real-estate market, he says, and a slowdown could encourage the country’s architects and developers to mature and experiment. “I think this going to benefit China in the future. The pace of expansion had been just too fast.” But he adds, “The next six months are going to be very, very uncomfortable.” 

Correction: Due to a transcription error, the original story indicated that construction on SOM’s Pearl River Tower in Guangzhou, China, had temporarily ceased. In fact, that project was never suspended. A separate large commercial and residential project in Guangzhou had been put on hold, but construction has since resumed.

[ Page 2 of 8 ]

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In McGraw-Hill Construction’s Economic Stimulus Plan special section: Browse comprehensive resources related to the U.S. economic stimulus plan and read additional coverage from BusinessWeek, ENR, and other publications.
McGraw-Hill Construction

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