Qianhai to see more Grade-A office demand after expansion
December 3, 2021 / By Andy Huang, Rachel Cui
On 6 September 2021, the central government unveiled the “Plan for Comprehensively Deepening Reform and Opening-up of the Qianhai Shenzhen-Hong Kong Modern Service Industry Co-operation Zone”, paving the way for closer business and economic ties between Shenzhen and Hong Kong. According to this plan, Qianhai’s physical area will expand from 14.9 sq km to 120.6 sq km, an eightfold increase extending its reach to Nanshan district to the south and Bao’an district to the north. Clearly, the implication of this expansion is not its larger catchment area but an industrial layout that can integrate modern service and manufacturing industries.
Figure 1: Industrial interaction, driven by original Qianhai Zone and High-tech Park
Source: JLL Research
Note: * refers to developing industries, while the rest are major industries
Since 2016, Bao’an district has been striving to establish a strong manufacturing foundation for its economy. In 2020, there were 4,316 medium to large industrial enterprises in Bao’an, ranking top in Shenzhen. Such a large industrial system requires digitisation and the support of the service industry in the longer run.
After the expansion, Qianhai will offer local technology companies a bigger stage to accelerate the process of industrialisation. Thanks to its advantages in industrial base and infrastructure, new types of businesses relating to “Internet+” and artificial intelligence are also anticipated to emerge. The service industry is expected to benefit from technological innovation and increasing business opportunities. Hence, Qianhai’s industrial value chain will become more comprehensive.
High-quality companies drive an uptick in net absorption of office space in Qianhai
During the past two years, the infrastructure in Qianhai has been significantly improved, with multiple main roads being completed. More ancillary commercial facilities were developed as business activities continued to grow. For example, the entry of leading companies, such as OPPO and IBM, has attracted numerous companies from both upstream and downstream. Accordingly, Qianhai accounted for a higher proportion of the city’s total net absorption, jumping from 0.5% in 2017 to 25% in 2020. Net absorption of Grade A office space in Qianhai exceeded 30,000 sqm in the first three quarters in 2021, hitting a record high.
Figure 2: Breakdown of net absorption in Shenzhen’s Grade-A office
Source: JLL Research
Outlook: The expanded Qianhai will see more office demand, given the tighter regional connections
Figure 3: Major drivers of Qianhai’s Grade-A office demand
Source: JLL Research
The expansion of Qianhai helps connect the hinterland of intelligent manufacturing north of Shenzhen and facilitates access to the southern part of the city. Qianhai can link mainland companies to Hong Kong and Macau companies with rich experience in professional fields, including cross-border finance and legal services. This will further stimulate Grade-A office demand in Qianhai. Moreover, the improving business environment in Qianhai will further add to its advantages in infrastructure and other supporting facilities. Therefore, local industrial parks are likely to attract more attention from overseas manufacturers.
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