Untapped potential in China’s Greater Bay property market

April 17, 2019 / By  

On the 18th of February 2019, the State Council of the People’s Republic of China issued an “Outline Development Plan for Guangdong – Hong Kong – Macao Greater Bay Area”. Such a plan signifies a significant milestone in establishing regional cooperation and economic growth within the Greater Bay Area (“GBA”)* of China.

Map of Greater Bay Area

Source: MapIT, JLL

New development opportunties in the office market:

The GBA’s future development will shift from manufacturing to service industries. The main driving forces below will inject new development opportunities in the office market within the GBA:

  1. Increased foreign investment activities within the GBA. Most notably, Hong Kong will be identified as a global offshore Renminbi business hub and international asset management centre.
  2. The promotion of innovation and the opening up of the financial industry, which is being fostered by the national government with the aim to consolidate the service industries in Hong Kong, Guangzhou and Shenzhen.
  3. Shenzhen’s increased importance as a prominent technological hub will accelerate manufacturing and economic development within the GBA.
  4. The office market in Hong Kong is influenced by cross-border capital flow and emerging economic development. Mainland financial capital will increasingly allocate their assets in Hong Kong, particularly in Central as an ideal location choice.

Source: JLL

The rapid rise of retail property market in the GBA:

  1. Rapid infrastructure development will further enhance entertainment and leisure based activities, creating a positive spill-over effect to traditional retail businesses and increasing GBA’s investment footprint in emerging retail locations.
  2. Brands from mainland China will continue to implement strategies to expand their global presence by utilising Hong Kong as an international gateway and an intermediary pathway to enter the international market, particularly in Southeast Asia. Mainland brands have fuelled leasing demand for four of Hong Kong’s major retail hubs. It is anticipated thatn such momentum will continue in the future.

Positive growth in retail sector and transformation of manufacturing industries will help boost logistics properties

Second Tiers Cities will experience a positive performance outlook primarily due to lower property prices and increased operational efficiencies brought about by robust public infrastructures. Such cities cover Dongguan, Foshan, Huizhou and Zhongshan, which are all fully equipped with a strong consumer and manufacturing base. Future investment demand will substantially increase, as the transparency of the investment market and the number of high-standard warehouses increase.

Increase in residential demand

As connections and working relationships between Mainland and Hong Kong/Macau increase, there will be greater demand from residential leasing market particularly in the major cities of GBA. It is highly anticipated that demand will rise, creating opportunities for office clusters and transit-oriented developments. The increased work mobility between Mainland, Hong Kong and Macau is expected to substantially generate the expansion of residential developments.

The development of GBA requires substantial national strategic implementation in an effort to establish itself as a world class economic and cultural hub. In the current booming market, real estate developers, business enterprises, investors as well as other individuals should fully take advantage of such trend in order to take advantage of such future growth.

Note: *GBA includes Hong Kong, Macao and nine Mainland’s cities (Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen and Zhaoqing).

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