Setting up for future growth

March 29, 2012 / By

Flipping through Jones Lang LaSalle’s recently released China50 – Fifty Real Estate Markets that Matter, one gets the impression that the development of real estate markets in the Pearl River Delta (PRD) has plateaued. Since the last edition of the report (released in 2009), Dongguan and Zhuhai have made no significant progress along the City Evolution Curve. Foshan and Zhonghan have posted modest improvement but their pace of development has lagged behind other cities such as Changsha, Hefei, Zhengzhou and Jinan. Moreover, a number of cities, such as Chengdu, Chongqing, Shenyang and Tianjin have narrowed the gap between themselves and the PRD’s two Tier 1 benchmark cities, Guangzhou and Shenzhen.

Part of the reason why other cities in the China50 have performed more strongly over the last two years is largely due to the increased opportunities brought about by a faster rate of economic growth. Cities such as Chengdu and Chongqing, in China’s mid-west, are currently at the epicentre of economic activity as manufacturing moves away from the coastal areas and further inland.

So are the PRD property markets in danger of falling behind in the race to maturity? We think not. As highlighted in our white paper “China Pearl River Delta – Moving up the value chain” (released in 2010), the PRD is currently in the midst of a restructuring process that is transforming its economy from one that is highly reliant on low-end manufacturing to one that is made up of high-tech manufacturing and business services. This transformation is effectively laying down the foundations for the next wave of growth. Hence, while PRD cities appear to have made little progress along our City Evolution Curve in the latest edition of the China50, don’t be surprised to see these same cities being among the greatest improvers in the future.


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