This article was published in Commercial Real Estate #4 April/May
2007. Republished with permission.

For more information check Commercial Real Estate in China

Intro

The creative industries, which comprise of the arts, media, and
design, are among the fastest growing economic sectors globally. The
global market value of the creative cluster was estimated at more
than 1 trillion U.S. dollars last year. Since Richard Florida
published "The Rise of the Creative Class" (2002) it became a must-
implement for civic policymakers, city planners, developers, artists,
arts administrators and public officials. Recently the Chinese
government decided to invest more in the Creative Industries and its
effect can be felt. Besides being a concept, the creative industries
need a dynamic and stimulating urban and artistic environment from
and in where they can operate. While the internationally renowned art
district 798, Dazhanzi area, is being transformed from a living art
community into a economy driven displaying art district, thereby
giving frictions between the artists and the owners of the area, the
Seven Star Group, the Boloni Group – a Chinese-Italian consortium
producing kitchens and furniture and headed by well known personality
Cai Ming, the CEO of China’s number one total design company, Kebao &
Boloni Kitchen & Bathroom Furniture - recently presented their plans
for the development of a new art area. Called Gaobeidian Art
District, it is located Beijing’s central Chang’An Avenue eastward
beyond the fifth ring road. Bert de Muynck gives an overview of the
rise and fall of the Creative Business District 798 and gives a first
row overview of the ambitions brewing in the Gaobeidian area.

798

history

Between the third and fourth ring road in northeast Beijing, on the
way to the airport, sits Factory 798, China’s biggest and
internationally acclaimed art district. 50 years ago, Factory 798 was
set up as an electronic production site, far away from the city
center, where some of the key components of China’s first atomic bomb
and man-made satellite where manufactured. All this labor was roofed
under grandiose East German factory architecture. 798’s total ground
surface is 360,000 sq meters. In 2004 the area’s real estate was
valued at an estimate of more than RMB1 billion, but at the same time
the presence of galleries and institutions related with selling art
more than doubled. The current value of 798 is unknown. At the end of
the 1980s the factory faced reality; production slowed down, and at
the end of the 1990s a large number of buildings were left vacant.
This situation facilitated the Central Academy of Fine Arts housing
their sculpture department in some of the empty buildings; they were
an inexpensive and spacious temporary option. Soon after, the
sculptors were joined by a group of independent artists who moved in
after failing to create an artists’ village elsewhere, because of
restrictions from Communist authorities. The communist leadership
finally left them alone, but in the mean time their presence turned
the area into a successful art district. This led to bitter relations
between the artists and the landowners, who through a series of
events (no more leasing of space to artists and no renewals of their
rent contracts) managed to move out the founders and opened the door
for business-driven (both Chinese as international) galleries,
foundations and corporations. Now, Hang Rui, 798’s leading artist,
has teamed up with Cai Ming to develop their dream of a Chinese
artist community near Beijing’s Central Business District called the
Gaobeidian Art District, while plans for 798 during the last year
have swung between demolition, the creation of China’s Silicon Valley
and recently, with government support, to preserve it a ‘cultural zone’.

Factory 798’s recent history is a struggle between the desires of the
artist community and the realpolitik of the landlords, SSGC. This
started in 2002 when artists and cultural organizations began to
divide, rent out, and re-make the factory spaces, gradually
developing them into galleries, art centers, artists' studios, design
companies, restaurants, and bars. "798" became a cultural concept,
influential on concepts of artists’ communities, urban culture and
living space. At the same time, to make ends meet, buildings were
rent of for business activities for Dior, Shell, Toyota and Omega.
Bérenice Angremy, part of the team involved in developing the
Gaobeidian Area and director of Thinking Hands Co.,LTD, working for
five years in 798, explains the evolution: “We can see three
different phases. In the first phase, 2002-2005, we moved into a
largely empty factory and organically turned it into an art district.
The first galleries entering here, had a mission; to fill the gap in
Beijing’s creative society. 798 was from the start a space open to
the public, realizing that one day it would be demolished. After the
three year contract finished, we renewed it year by year with SSGC,
our landlord. They did not recognize 798 as an art district. In the
second phase, after 2005, SSGC stopped renting to foreigners and
artists; this explains the big amount of second-hand rents. At that
time the international art world recognized 798, giving it fame. The
third phase, summer 2006, starts when the Chaoyang District decided
to preserve 798; making it into one of the ten pools of creativity
for Beijing. They made a deal with Seven Stars Group off which we are
not aware.” 798’s acclaimed transformation made SSGC eager to
maximize the rental income paid by artists, galleries and other
facilities. At the same time officials in Chaoyang District (where
798 is located) and some of Beijing's vice mayors preserved the area
as a "cultural zone" in harmony with plans for the 2008 Olympics. A
nonbinding resolution to that effect was passed in the National
People's Congress.

From living art community to display art community

The transformation from an experimental art community into a guided
art business district, supported by foreign investment, is not
necessarily bad, explains Dutch architect Neville Mars, part of the
team involved in developing the Gaobeidian Area and chairman of the
Dynamic City Foundation: “The 798 process is pretty standard, not
only in China. Worldwide, art districts, when successful, move
towards expensive rents and quick changes in tenants. The question
how that process occurs is another matter, if it becomes a vibrant
essential part of the city, like SOHO in NY and London than it is
positive. In 798 there is a weird contradiction between management
and no-management. In the current situation the market and government
try to be the guiding force to make it successful, dealing with
something they have no idea about, while the people in the field feel
it takes undesirable directions. When I moved into 798, we were part
of a community. Today there is nobody left. There are no more art
producers around, only art sellers.”

The preservation of 798 is questioned by both Neville Mars and
Bérenice Angrémy on its capacity to keep the identity of the area,
its raison-d’etre of being internationally acclaimed. Neville Mars
expresses his doubts: “The so-called international status, which
people say it already has, is being regarded differently by
municipality and the Seven Stars Group whenever it convenes them,
they want to push it forward as an international Olympic attraction,
not acknowledging the original qualities the foreigners came here
for. It is being developed so much it looses its quality. For me, the
most interesting question is, what is the program in area like this
and what role does it play in the city?” Bérenice Angrémy formulates
the question how to safeguard artistic quality as follows: “To have
business, like cafes, is not a bad thing, we wanted this. I question
the quality. If you open the door for resourceful galleries that are
not competitive in terms of quality, that is a problem, that is
business for business. Now it is obvious our landlord wants to split
the district in one art and one commercial section. There will be
clothing stores here, but we don’t need that. If you allow the
clothing market, you are dead, it is not an art district.”

The Gaobeidian Art District

With 798 under pressure, the East part of Beijing is taking the lead
in becoming Beijing’s cultural hotspot, for which I propose the a new
slant on the acronym CBD, this time as Creative Business District.
Plans and investments are on the table to create Gaobeidian Art
District, developed by Cai Ming and 798/Dashanzi figurehead Huang
Rui. Cai Ming leased for 50 years a 22-hectacre site with old
factories surrounded by green.

International vision for total solution design

Cai Ming is a leading Chinese businessman in the field of high-end
kitchen equipment and collaborated with Italy Boloni to found the
Boloni Kitchen & Bathroom Furniture (Beijing) Co., Ltd. In 2005 Cai
Ming introduced the integrated home equipment décor and design
solution as a basic component of modern lifestyle. Cai Ming works
with 70 designers in China, 19 in Italy and made RMB700 million in
sales last year. Three years ago he bought a furniture factory in the
Gaobeidian area, hoping to establish his own factory district. Soon
after, the area was incorporated into the CBD (Central Business
Distirct) and factory development was forbidden. This turned Cai Ming
almost overnight into a developer: “At that time I had no experience
as a developer. Boloni is a life-style brand, interested in fashion,
architecture, interior design,… from all over the world. We study how
a luxury brand relates to life-style – in different countries and
cultures. When the government changed the area’s function all this
got intertwined, and I decided to develop this area for art, culture
and creative industries.” Cai Ming is during the interview I
conducted very clear about the potential of the location, the support
from the local government (who praises him, tells he, for his
international vision) and his confidence in the growth of Chinese
culture: “I think our location is very important, it is not downtown,
but on the fifth ring in the East. In the next years, all the real
estate investment will come to this area. By cooperating with the
government we can keep the price low, which is important in the art
and creative industry, they can’t pay high rents. In the first 5 to
10 years we plan low-cost so to let galleries, artists and design
companies enter; after this we will invest in high value commercial
projects.” One third of the site is old factories, to be renovated
under the supervision of Huang Rui, two thirds will be planned from
scratch, by Neville Mars. For the long term vision Cai Ming is
advised by Bérenice Angremy. The first phase will turn the old
factories into an artist village; the trigger to develop the other
parts of the area.

The plan for GBD Art District involves six blocks on 450,000sq meters
of land and includes: the Industrial Renewal Art District; the
Flagship Store Street (international top brand stores); the New Scene
of Qingming Shanghe Street (traditional culture); the Peach Blossom
Island (bars and clubs); the Creative Land (avant garde art) and the
Business District (high class hotel and conference center). This six
block area is slated for completion in 2010.

Integrated development of art and market

Cai Ming counters his inexperience as a developer by focusing on the
uniqueness of the project and the opportunity to bring Boloni, by the
end of 2008, to the stock market: “It is very difficult and nobody
knows how to manage a residential, commercial, art area; there is no
experience in the world. We are the company, along with experts, that
is the most suitable to do this.” In the first two year he will
invest 10 million euro, predicting an overall investment of 100
million euro. The initial investment is low; due to low renovation
costs, providing artists low renting costs. The return on investment
will come on longer terms, when the commercial and residential
project in the GDB south area kick in: “I think the profit will be
very high, because the cost for the place is not high, that is very
important. But if we do the normal things like others, than there
will be no profit. We want to be unique in the world; the only art
and culture consuming area. There will be 20 million foreign visitors
in Beijing and five times more Chinese visitors; with this mind we
will be the only place to show the real China, the culture; from
history to future. We will show its content; from within. If we have
this, our business value will grow in another five years, this is
also possible because our site is big enough.”

To make this project happen, Cai Ming works together with foreign
experts like Neville Mars and Bérenice Angremy who see the
potentiality of the new art district by intertwining the Chinese
culture climate with the development of the Creative Industries in
Beijing and the eastward expansion, beyond the CBD area, of the
Beijing Metropolitan Area. As such GBD can become a pivotal point in
Beijing’s urban, artistic and cultural expansion. Neville Mars
explains the challenge as follows: “We are building from scratch,
which is almost against the nature of the art districts, where
planners have very little influence. Our plan will have a buildable
footprint of 60,000 square meters and the built floor area is 6 times
this, with a FAR (floor area ratio) of 2 – creating semi-high density.”

Bérenice was contacted for her involvement in the re-orientation of
798-area, she formulates her long-term vision as follows: “Give
priority to the art district, not only displaying art, but also
living with art; that comes from our experience here. 798 was
completely organic. Thinking about people that are around and not
only the art that is displayed. Another key thing is the green land.
We can give a quality of life to Beijing, coming from the art
atmosphere, but also from the services you give.” Equally important
as setting up the program for the area, she sees the involvement and
commitment of the Cai Ming, the developer, to move the project
forward, without loosing the understanding of the business side of
it: “We are very clear which part is business and which not, in 798
we are under the pressure of only money. They just want to grab what
they can grab, here we have a person that came to us, I have this
idea, this is a huge land, green and beautiful. That brings Beijing a
new quality of life that involves art.”

Conclusion

The rapid speed of urban development characterizing the Chinese
cities lead to considerable questions about the quality of life that
is being created. In a society changing its culture at rapid pace and
seeing the emergence of the Creative Industries, landowners and real-
estate developers are faced with the question how to provide these
groups with affordable spaces, understanding its potentiality to make
profit on long terms and its need to create a sustainable environment
where creativity and profit are not competing, but reinforcing and
supporting each other; combining the best of both worlds. These two
case-studies from Beijing, 798 as a struggle between ambitions, GDB
as one expressing the ambition to find a harmonious development,
could be seen as a model for what could happen in other Chinese
cities; whether in art districts in Shanghai, Guangzhou or Chongqing.
Incorporating the programs for the Creative Industries in the larger
context of urban development, like happens in the GBD area, poses new
challenges for the relation between developers, clients, market,
audience and artists. Possessing a great market value, being very
vocal, having the ability to draw international attention and
possessing a keen eye to develop from the bottom up successful urban
environments, the creative industries seem to be ready, as
illustrated in the case of GBD, to invest their talent in
collaborating with real estate development in order to create
profitable, livable, attractive and sustainable urban environments.

Bert de Muynck is an architect and writer. He lives and works in
Beijing.

Links

Architecture Competition Gaobeidian
Masterplan Gaobeidian by DCF
Boloni Kitchen & Bathroom Furniture Co