China property

Transformation into a tourism destination draws international investment to Zhuhai’s Hengqin island

Real Madrid and Porsche sign deals with Hong Kong-listed developer for experience centres

PUBLISHED : Wednesday, 06 December, 2017, 6:57am
UPDATED : Wednesday, 06 December, 2017, 9:21am

When Begona Sanz, the deputy managing director of Real Madrid soccer club, visited Hengqin island in Zhuhai in February, she was impressed by the number of tourists flocking to the Chimelong Ocean Kingdom theme park, its sole attraction.

“They were shocked to see Chimelong Ocean Kingdom so jam packed,” said Larry Leung, the senior vice-president of business development (Hengqin) at Hong Kong-listed Lai Fung Holdings. The theme park attracted 8.5 million visitors in 2016, an increase of 13.2 per cent since it opened in 2014.

Sanz was part of a three-member team that had flown in from Spain to view the latest developments on the island – billed as the “Orlando of China” – that is next to Macau.

In September, the Spanish soccer club signed an agreement with Lai Fung Holdings to operate an indoor interactive soccer experience centre in Hengqin, its first investment on the mainland. The 1.2 hectare centre, expected to open in 2021, will be included in phase two of Lai Fung’s Novotown, a cultural and entertainment attraction under development.

Hengqin is being transformed into a tourism destination for mainlanders and overseas travellers. Zhuhai is among 11 cities in the “Greater Bay Area” identified by the Chinese government in March for further development, and international investors have been quick to turn their attention to Hengqin.

Also in September, Porsche too announced a partnership with Lai Fung to open an auto experience theme centre at Novotown.

In November, Lai Fung announced the launch of Innovation Leadership Academy Hengqin, which will be managed by Harrow International China Group and is to open in September 2020. The school will accommodate 1,500 pupils from the mainland, Hong Kong and overseas.

Residential and office prices in Hengqin have doubled since 2014, and the Zhuhai government had to roll out a slew of cooling measures to contain them.

The number of transactions on the island’s residential market dropped sharply following the introduction of home purchase restrictions in April. These transactions dropped by 52 per cent to 1,211 deals in the first six months this year when compared with the same period in 2016, according to agents.

“But the prices have not shown signs of falling,” said Jacky Shek, a senior director at Centaline Property’s Macau and Hengqin office.

Zhuhai requires non-local residents to pay social insurance for five years before they can buy a flat. But Shek said home prices in Hengqin, a market mostly dominated by buyers from Macau, have almost doubled to 45,000 yuan (US$6,799) per square metre from 25,000 per square metre in 2014.

“Capital has shifted to the office market, which is unaffected by the curbs,” Shek added. In contrast to the slump in home sales, he said, the number of office transactions went up by 57 per cent year on year to 712 deals in the first six months this year.

“Mainland companies are major buyers in the office market as they plan to expand their operations in Hengqin, which stands to reap huge benefits as it is a national free-trade zone,” he said.

Shek said his company had concluded several big-ticket transactions in the office sector, with some mainland firms buying 10,000 sq ft to 20,000 sq ft for as much as HK$80 million.

“These companies will set up office in Hengqin, where accessibility will be greatly improved when the Hong Kong-Zhuhai-Macau bridge opens.”

There were 32,830 companies registered in Hengqin as of May, 2017.

Zhu Wenchang, an agent at Wanluen Property Agency, said the average transaction prices for offices were between 40,000 yuan and 60,000 yuan per square metre at Hengqin Phoenix Tree Tower and Huarong Building, two of the largest office projects in Hengqin.

“Eighty per cent of spaces in the two office buildings have been sold to corporate buyers, including finance institutions from Beijing,” said Zhu.

Eric Ho, vice-chairman of the Hong Kong Small and Medium Enterprises Association, said the body would organise its third trip to Hengqin by the end of this year.

“Our members are interested in learning more about the island as lots of new developments such as convention centres, hotels and entertainment facilities are under construction. We would like to explore what opportunities this will offer to us,” he said.