Shenzhen’s constant metamorphosisMay 12, 2017 / By
Urban regeneration has played a key role in Shenzhen’s transformation into one of China’s two national financial centres, alongside Shanghai, and into the nation’s technological and industrial innovation centre. Whilst much of the city’s redevelopment has historically focused in core urban areas such as Lohou and Futian districts, an increasing amount of development is now focusing on traditional industrial areas in suburban districts. Shenzhen-based Horoy Holdings, for example, is currently redeveloping a former industrial area in Bao’an district into a 3.2 million-sqm mixed-use development, consisting of office, retail and residential elements.
As more of the Pearl River Delta’s (PRD) labour-intensive manufacturing moves further inland or relocates to other Southeast Asian countries, the number of idle factories scattered across the city has been steadily rising. Yet, the growth of Shenzhen’s financial services and technology sectors is driving demand for high quality real estate. As a result, industrial facilities located in designated suburban renewal zones, which are largely centered along current and future metro lines and expressways, have become highly sought-after by investors and developers.
To help facilitate the development of the city’s new economy, the government has been encouraging the repurposing of old industrial properties into offices, business parks, retail, and residential developments. Whilst the uptick in investor interest has seen prices spike, surging house prices have kept demand largely intact. Moreover, the regeneration of industrial land is attracting more high value-add companies into suburban locations, which is supporting the demand for offices and business parks in the city’s peripheries.
Still, investing in these projects is not without risk. Urban regeneration projects are usually subject to longer development cycles which can be further hampered by government approvals and stricter urban renewal policies. Coupled with a volatile financing market, investors must also consider the balance of opportunity.
Looking forward, we expect urban regeneration in decentralised locations to speed up urban agglomeration and further reshape Shenzhen’s metropolitan landscape.
Map: Key suburban redevelopment zone of Shenzhen
Source: MapIT, JLL
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