Greater Bay Area presents new opportunities for Hong Kong property developers
As infrastructure projects near completion, Hong Kong is set for further integration with its counterparts in mainland China, and this in turn is likely to boost demand for housing and commercial space
John Siu is managing director of Cushman & Wakefield Hong Kong, a property consulting firm. He considers how development of the Greater Bay Area will affect real estate development in the city.
How is better transport infrastructure in the Greater Bay Area expected to transform the 11 cities included in the plan, including Hong Kong?
The success of the Greater Bay Area depends on the development of transport infrastructure, such as the Hong Kong-Zhuhai-Macau Bridge, and the integration of the 11 cities included in the plan. During the initial development stage, local governments submitted a proposal laying out their city’s function, positioning, and role based on their respective strengths and advantages. By October, the proposals will be consolidated by the central government into a blueprint for the area. We expect the three biggest cities – Hong Kong, Guangzhou and Shenzhen – each to play a key role in the Greater Bay Area development plan. In addition to the Hong Kong-Zhuhai-Macau Bridge, which is scheduled to commence operations later this year, many other major infrastructure projects are under construction. Extra connectivity across the area will be provided by the Second Humen Bridge, near the Nansha Free Trade Zone (FTZ), which is scheduled for completion in 2019; and by the Shenzhen-Zhongshan Bridge,to be completed in 2021.
What are the economic and social benefits of the Greater Bay Area for Hong Kong?
The development of the Greater Bay Area is likely to further strengthen Hong Kong’s role as a “connector” between the world and mainland China – especially under President Xi Jinping’s “Going Out” policy. We expect the city to continue to enjoy strong government policy support, which is likely to translate into buoyant demand for office space – especially in Central from mainland financial services and securities trading firms. Let’s take the Qianhai FTZ as an example. Shenzhen is a domestic finance centre, with maturing financial markets serving domestic enterprises. Hong Kong is playing its role as an international finance centre. I think the two cities will continue to complement each other as China opens up its capital account, and Qianhai will be where this synergy takes place. In the future, not only will Hong Kong-based financial institutions have a presence in Qianhai, I also expect to see more cooperation between Hong Kong universities and mainland hi-tech firms on innovative research projects. Another key growth area will be Hengqin and its surrounding areas, benefitting from the opening of the Hong Kong-Zhuhai-Macau Bridge. From my observation, some new projects in Hengqin have attracted much interest from Hong Kong buyers.
How is this grand plan going to reshape
Hong Kong’s real estate market?
Development of the Greater Bay Area is likely to change the commercial landscape in the northern part of the city. In the northwest New Territories, near Shenzhen, is the Hung Shui Kiu New Development Area (NDA) which is expected to be a major beneficiary. The NDA is designated a regional economic and commercial hub, providing 150,000 employment opportunities and 68.5 million sq ft of commercial gross floor area. We expect the NDA to draw traffic passing in and out of mainland China, which will translate to demand for commercial space – especially in the industrial and retail sectors. We expect more Hong Kong professionals to commute to Qianhai in the future, resulting in increased demand for housing in places like Tuen Mun and Yuen Long.
Will there be more opportunities for Hong Kong developers?
Of course. Hong Kong developers are already working on projects in places such as Qianhai and Nansha. In Nansha, some areas are designated exclusively for investors from Hong Kong, Macau and overseas, with corresponding taxation and customs clearance support.