Beijing redesign proposal derails Langfang industrial park project
Developer welcomes delay as the regional development project will boost land value
The revival of a proposal to jointly develop the municipalities of Beijing and Tianjin and Hebei province, which surrounds them, has led to the suspension of Wang Jianjun's plan for an industrial park in the region because it will need to be redesigned.
But he is more than happy with that development.
"The longer it gets delayed, the higher the value of my land reserves," said the chairman of Vast Group, an industrial park operator in Langfang, a small city between Beijing and Tianjin that stands to benefit from the joint regional development.
The original plan was to build a 15-square-kilometre industrial park in Langfang's Guangyang district to help nurture hi-tech firms. But with Beijing's second international airport to break ground this year, with two-thirds in Beijing and the rest in Langfang, all the surrounding areas need re-planning.
"The local land market will heat up when construction of the airport starts, and hit its climax when the airport is ready for operation," Wang said in Hong Kong this month during a trip to attract investors.
He said the Hebei provincial and the Langfang city governments were working with Beijing on the repositioning of his park.
A mega project in its own right, the new airport will also be a test of President Xi Jinping's efforts to speed up joint development of Beijing, Tianjin and relatively poor Hebei. Xi revived the idea by calling a special meeting in February and urging top-down design, in part to tackle worsening traffic and pollution issues in the capital.
The idea is not new and has been pushed by Hebei for several years, without any major breakthrough to date.
"Changes will happen more quickly this time than before because there is strong demand for Beijing to move some of its functions outwards as the city's population has exceeded 20 million," said Annie Lei, national director of China consulting at real estate firm Cushman & Wakefield.
But first of all, the central government needed to define what role each city in the region was going to play and what kind of policies they could offer to attract different industries, she added.
Developers have been quick to jump on the opportunity. Beijing Capital Development said in its annual report last week that it would "actively develop residential, commercial and industrial projects in the economic zone surrounding the capital and push forward regional growth".
Mainland media has reported that some developers in Baoding, Hebei - further from the capital than Langfang - increased asking prices by 10 per cent last week, bucking a national trend of slowing transactions that has forced developers to cut prices in major cities including Beijing.
Liu Wei, a senior research analyst at the Peking University-Lincoln Institute Centre for Urban Development and Land Policy, cautioned against putting too much faith in the joint development proposal.
"We have to wait for transaction data to see whether there is real housing demand," she said. "Some of the companies and industries in Beijing may move to these cities, but that will not happen overnight."
To speed up joint development, the central government needed to establish a co-ordinating body above the three local governments to make sure the transition was smooth and fair, Liu added.
Wang said Langfang would "accept some industries from Beijing, but only the good ones".
"We definitely don't want intensive energy guzzlers or heavy polluters," he said.