Guangdong Free Trade Zone Heats Up PRD Residential MarketThe National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) had their annual sessions in March this year. During the two sessions, the development of Shanghai Free Trade Zone was highlighted and the next batch of free trade zones were approved to be launched. Out of the two, Guangdong Free Trade Zone (FTZ) attracted the most market attention.

Guangdong FTZ includes three major parts: Qianhai in Shenzhen, Hengqin in Zhuhai and Nansha in Guangzhou. The three areas have different focus – Nansha is developing into a new logistic center facilitating industrial transformation and development of high-tech industries in Pearl River Delta (PRD), while Hengqin (located near Macau) will be equipped with high-end hotels and entertainment facilities to promote creative industries and tourism. On the other hand, Qianhai aims at developing into a financial hub of PRD and foster cross-border RMB lending service.

The property market was heated up by the promising prospect of Guangdong FTZ. Despite the high inventory stock, the transaction volume of residential units in Nansha has still reached a new high, with more than 1,000 transactions recorded in December 2014 right after the announcement of FTZ approval. The average price of Nansha Wanda Plaza Apartments rose above RMB 10,000 per square meter.

As for Hengqin, the high property prices in Macau drove local investors with sufficient funds to Hengqin market. Other than that, the newly announced border arrangement between Macau and Hengqin constitutes as a favorable factor. The border gate will now be open for 24 hours for travelers, facilitating the crossing between Macau residents and mainland residents. Officials forecasted that by the year 2020, one third of Hengqin population will become Macau residents. Supported by strong demand from Macau, the average price of Hengqin remains high at over RMB 40,000 per square meter.

As Qianhai is positioning itself as a new central business district in PRD, the demand of the residential market mainly comes from investors rather than end-users, which accounts for more than 70% and has pushed up the average price of residential units to around RMB 35,000 per square meter in February 2015. Nonetheless, the related authority emphasized that speculative activities in the property market will not be encouraged in Qianhai. New requirements were also attached to land sale arrangements to ensure that certain sites would only be granted to specific industries. For the newly launched commercial sites in Qianhai, only self-use office buildings are allowed to be developed.

Following the launch of Guangdong FTZ, further regional cooperation will be fostered. Due to the factors mentioned above, experts expect a positive property market performance in Qianhai, Hengqin and Nansha.