Southeast Shanghai’s Zhangjiang Hi-Tech Park[1] recently announced ambitious plans to upgrade itself into a ‘Science City’. The scheme puts the park on track to compete with major Asian science parks such as Singapore’s One North science park and Japan’s Tsukuba science city.
Currently a leading technology zone and one of Shanghai’s top business park clusters, Zhangjiang’s new boundaries will be expanded to 94 sq km (triple that of Tsukuba’s 27 sq km core district[2]) while also pouring investment into building infrastructure, establishing new facilities, and creating jobs.
As Zhangjiang grows into its new boundaries, it will capitalise on its existing advantages and present new opportunities for real estate investors. We explore the main drivers of Zhangjiang’s growth below:
- Geographic advantage: Zhangjiang offers high accessibility to Shanghai’s traditional core CBDs (including Lujiazui) as well as Pudong Airport.
Map: Distance from Zhangjiang to Core CBDs and Pudong Airport
Source: JLL
- Policy support gives Zhangjiang a tailwind. Zhangjiang has long been a centre for fundamental scientific research, and following its expansion a number of new world-class research institutes and facilities are already beginning construction (see table below). With President Xi Jinping recently voicing approval for Shanghai’s positioning as a global innovation and technology hub, Zhangjiang has placed itself in a leading position to capitalise on central government support.
Table: Selected list of world-class research institutions and facilities in Zhangjiang
Source: Shanghai Government, JLL
- Top talent forms the cornerstone of Zhangjiang’s development. Zhangjiang already is home to 685 hi-tech companies (as of end-2016) and employs 360,000 people. The area is a magnet for young talent. A total of 8.9 million square metres of multi-family housing is scheduled for construction there, and larger sizes of new houses reflect rising standards from an increasingly affluent workforce.
New real estate opportunities on the horizon
We expect Zhangjiang to rapidly grow its global presence by attracting top companies and talent. This will inevitably lead to real estate investment opportunities and we believe commercial real estate is emerging to meet growing demand.
Our analysis indicates that Zhangjiang’s existing commercial real estate lacks high-quality properties. Amongst the 3.6 million square metres of lettable business park spaces, only one-fifth meets high standards. Also on the retail side, the expanded Science City area contains surprisingly few high-quality shopping malls, with Chamtime Plaza being the primary standout – otherwise shoppers seeking modern consumer environments or high-end shopping must head towards Lujiazui.
With Zhangjiang expecting a wave of investment from science firms and an anticipated population to grow to 700,000 residents (most of them well-paid tech talent), demand for new high-standard commercial properties is set to mushroom.
[1] A designated Hi-tech Park in Southeast Shanghai, established in 1992.
[2] Core district of Tsukuba Science City refers to its “Research and Education District”, which is the developed district combining research and educational organisations with residences and public facilities (approximately 27 sq km).
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