Greater Pearl River Delta infrastructure to alleviate Hong Kong tight land supply
A number of key cross-broder infrastructure projects currently under development will cut the travel time between Hong Kong and neighbouring cities like Shenzhen and Guangzhou, enhancing the feasibility of corporations expansion their back office operations in these major Pearl River Delta cities, says CBRE.
The completion of these infrastructure projects in Greater Pearl River Delta will shorten the travel time by half to one hour, or creating various “one-hour commuting circles” where increase the flow of capital, people, goods and services, it said.
“Hong Kong has traditionally been a leading offshore investment hub for the mainland,” said Marcos Chan, head of research at CBRE Hong Kong, Southern China and Taiwan.
“However, with Shanghai emerging as another key financial centre for China, Hong Kong will need to continue its integration with the mainland and reinforce its influence in the emerging megalopolis. New infrastructure development will be critical in this process of integration.”
In its report “Greater Pearl River Delta Infrastructure Outlook” report, CBRE said the land supply in Hong Kong is under challenge, which my inhibit the real estate industry development and subsequently its overall economy.
The Hong Kong government has implemented a number of large-scale cross-border infrastructure projects, which include the Guangzhou-Shenzhen-Hong Kong Express Rail Link, the Hong Kong-Zhuhai-Macau Bridge and the Liantang/Heung Yuen Wai Boundary Control Point.
These key projects, together with a number of intra-city highway, railway and logistics facilities projects, will provide additional space to alleviate Hong Kong’s tight land supply.
Chan, however, said the integration would unlikely to pose threat to Hong Kong office demand and rents.
Currently, overall average office rents in Hong Kong were HK$64 per square foot, compared Shenzhen HK$20 plus per square foot and HK$18 per square foot in Guangzhou, he said.
“In a city where space availability is limited and backed by growing demand from Chinese enterprises, Hong Kong remains as a key market for making office investment,” he said.
The development of new local and cross-border infrastructure would benefit the city’s existing and future core business districts.
In particularly, the Guangzhou-Shenzhen-Hong Kong Express Rail Link would provide a convenient and fast means of transport between Hong Kong’s West Kowloon and Guangzhou via Shenzhen, prompting stronger demand for office space in and around West Kowloon, according to the report.
While the current focus of commercial development is on Kowloon East, planned road infrastructure connecting the East and West of Kowloon would ensure commuting between the two ends of the peninsula would be kept to within five to 10 minutes.
According to CBRE research, the Grade A office stock in Hong Kong in 2020 is estimated to reach 7.6 million square metre , an increase of only 11.8 per cent from that in 2015.
This is far from sufficient to cater to the long-term future demand, particularly as more mainland corporations expand to Hong Kong.
In contrast, the grade- A office stock in Guangzhou and Shenzhen combined will see a 2.2-fold growth from 6.7 million square metre in 2015 to 14.6 million square meter in 2020.
Upon the completion of the Hong Kong - Zhuhai- Macau Bridge in late 2017, the three places will be linked to form a strategic tourism hub for the Greater China region.