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Greater Bay Area

Birthplace of China’s revered revolutionary Sun Yat-sen now one of the country’s top property hotspots

House prices in the southern city of Zhongshan are surging as its inclusion in the ‘Greater Bay Area’ development plan draws buyers

PUBLISHED : Saturday, 24 March, 2018, 7:32am
UPDATED : Saturday, 24 March, 2018, 7:32am

At the sales centre for the Leading New Wave apartment complex in the Cuiheng New District in the southern Chinese city of Zhongshan last Thursday, buyers strained to get the attention of sales agents besieged by hordes of customers looking to snap up a flat in one of China’s hottest property markets.

They had come for the second sale of units at the complex, built by top Chinese developers Poly Property and Country Garden, after the first batch of 100 sold out in a single day in January at prices averaging 17,000 yuan per square metre (HK$1,957 or US$250 per square foot), some three times the average property price in the city three years ago.

Zhongshan, the birthplace of the revolutionary Sun Yat-sen who is revered as the father of modern China, is one of 11 cities in the Chinese government’s “Greater Bay Area” initiative – a grand development plan to link it and Hong Kong, Macau, Shenzhen, Guangzhou, Foshan, Dongguan, Huizhou, Zhuhai, Jiangmen and Zhaoqing into an integrated economic and business hub.

The Guangdong provincial government has committed 1.46 trillion yuan (US$231 billion) to build bridges, highways and railways to accelerate the transformation of the region into an area like the New York Bay Area, the San Francisco Bay Area or the Tokyo Bay Area.

By 2030, the gross domestic product of the Greater Bay Area could reach US$4.6 trillion, according to projections by the China Centre for Economic Exchanges, more than triple today’s level, and the highest among bay areas worldwide.

Some of the investment is already benefiting Zhongshan, with the construction of an eight-lane bridge bringing a new highway to the city expected to be completed in 2023. It will reduce travel time between the city and the regional technology powerhouse of Shenzhen to 30 minutes from the current two hours.

“Prices, which had not changed much in the past decade, began to surge in late 2015 when the Shenzhen-Zhongshan bridge was finally confirmed,” said Michael Zhang Qiming, sales manager at Kaishun Real Estate, a local property agency in Zhongshan. Prices have been soaring particularly in Cuiheng district, where the bridge connects with the city proper.

“In the past two years, we have probably seen 100 new projects debut in the city,” Zhang said. “The Greater Bay Area initiative may push the city’s prices to new high levels.”

Building cranes dot the skyline, with at least five housing estates under construction on both sides of the new highway during the 15-minute drive from Zhongshan port to the city centre.

“Buyers from other parts of China, Shenzhen in particular, have flooded to the city since 2016. Most of them just flew to the city during a weekend and paid the down payments right after they visited a couple of projects,” said Zhang.

The city is not as developed as some of its neighbours like Zhuhai and Dongguan as it has fewer factories, but it offers a better natural environment, including hiking and fishing, as well as golf and other activities.

That is another reason for the rising home prices. For the five years to 2017, average home prices in Zhongshan rose 67 per cent to HK$1,018 per square foot, according to property broker Cushman & Wakefield.

However, the rises have started to push some potential buyers to look at other cities in the Bay Area, for example Jiangmen and Zhaoqing, where prices have lingered below HK$1,000 per square foot, the lowest in the area.

Further away from Shenzhen and thus less connected, the cities offer a cheaper option – average prices in the two have risen 35 per cent in the last five years, compared to as much as 111.4 per cent for cities in the eastern part of the Bay Area, including Zhongshan, Dongguan, Zhuhai and Huizhou, which benefit from better links to the big centres.

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Tony Wan, general manager for sales and marketing of K Wah International Holdings, the most active Hong Kong developer in Jiangmen – which is also the hometown of the company’s chairman, tycoon Lui Che-woo – said that once transport infrastructure improved, the city would be a good option for property buyers. 

“At present, it takes at least three hours by car to Shenzhen, but the journey time will be cut to one hour over the next several years. The increase in accessibility will provide a greater opportunity for real estate,” said Wan. The firm acquired two adjacent sites in the heart of Jiangmen with a gross floor area of 280,000 square metres for 2 billion yuan last year.

Average selling prices in Jiangmen are about HK$1,153 per square foot, compared to HK$3,458 per square foot to HK$4,142 per square foot for Zhongshan and Zhuhai.  

“We foresee people in Shenzhen and Zhongshan will consider moving to Jiangmen where homes are selling at more affordable prices,” Wan said.

Others see the whole of the Bay Area as a good investment for property buyers, as key infrastructure to be completed in the next few years will improve transport links and increase connectivity, thereby attracting population inflows from other regions and stimulating housing demand.

“We project property sales in the nine cities in Guangdong province will increase by 90 per cent by 2026,” said Raymond Cheng, an analyst at CIMB. “These cities will outperform industry growth of about 30 per cent.”

One of the first of the main infrastructure projects to be completed, the Hong Kong-Zhuhai-Macau bridge, is slated to open in the second quarter this year, presenting a huge opportunity for Hong Kong property investors, who will be able to drive to Zhuhai in 75 minutes instead of the current four hours.

Similarly, the start of operations of the Guangzhou-Shenzhen-Hong Kong Express Rail Link scheduled for the third quarter of this year will cut the journey time from Hong Kong to Guangzhou by half to just under 50 minutes.

And with Hong Kong one of the world’s least affordable cities for home ownership, places like Zhongshan are becoming more attractive. One 1,800 sq ft home currently on sale in the city for 4 million yuan, boasts 360-degree views of mountains from its balcony and Macau can be seen on a clear day. The equivalent price in Hong Kong dollars would only fetch a 250 sq ft flat on Hong Kong Island.

Last weekend, 50 Hongkongers attended a property market briefing in Zhongshan organised by Centaline Property Agency in Hong Kong, while many agents in Hong Kong offer weekly property inspection tours in the city.

Teddy Lam, a Hongkonger in his 40s, attended the briefing and liked what he heard.

“The prices in Zhongshan are affordable, the flats look nice and also some of my colleagues and friends have talked about buying a home there. It seems that the Greater Bay Area is going to be the trend and houses in those cities will go up, ” said Lam.

“Homes in Hong Kong are just too expensive,” he said.

Currently, Hong Kong buyers can buy new residential apartments with either 40-year or 50-year land use rights, compared to 70 years for residential homes or second-hand flats. Those whose hometown is Zhongshan can buy new residential homes, but are limited to one only.

Hongkonger Peter Leung, a catering business operator who moved his firm to the city six years ago, has already seen the benefits of life in Zhongshan. He bought a 110 square metre (1,829 sq ft) flat in Zhongshan for about 600,000 yuan in 2014.

“I am going to retire here,” Leung said. “It is a liveable city perfect for old people.”