China’s economic downturn hitting luxury commercial property and yachts in wealthy tech hub Shenzhen
- Hi-tech metropolis, home to Huawei, ZTE and DJI, is facing an overcapacity of office space, with demand unable to keep up with rising supply
- Economic downturn, along with US-China trade war and technology battle, is turning foreign investors away from the Guangdong city
The city – just over the border to the north of Hong Kong - is uniquely exposed to the multitude of headwinds facing the Chinese economy, given its track record of luring foreign capital as a special economic zone, and its status as a hotbed of innovation.
The year-long trade war with the United States has made Shenzhen as well as other parts of China less appealing to foreign capital. At the same time, the technology sector is under pressure from the mounting tech rivalry between the world’s two modern superpowers.
These are among the factors trickling down to the commercial property sector, where despite steady demand, developers - who have continued to build despite the macroeconomic problems - are facing huge overcapacity. The vacancy rate is now near 10-year high.
This is just one indicator of weakening economic sentiment in China’s wealthiest per capita city. A series of interviews with professionals from property sellers to yacht brokers reveals a group of businesspeople struggling with “the toughest year” of their careers.
One of those to feel the brunt is Cindy Huang, a veteran saleswoman of high-end serviced offices in Shenzhen’s central business district, who said 2019 has been the worst year on record.
Also of the view is Lan Liu, operations manager of a serviced office firm in the Futian district that is home to Shenzhen’s municipal government. “Taking into account tenants’ budgets and the increase in new supplies of offices, it can be said that there has been growing pressure for office landlords in Shenzhen to cut rents this year,” she said.