Property market in the Greater Bay Area

Premier Li Keqiang has announced in his annual work report that the central government will draw up the plans for the Guangdong-Hong Kong-Macao Bay Area (Greater Bay Area) this year to boost the regional economy and it has raised a lot of discussion about the outlook of the Greater Bay Area in the community.

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The Greater Bay Area is composed of Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Zhaoqing, Huizhou and Jiangmen, nine cities in Guangdong, as well as Hong Kong and Macao, the two special administrative regions. If the 11 cities can successfully coordinate the development, the area will become one of the largest and most important urban agglomerations in the world. On the other hand, the development will come across different challenges, like the differences in institution and culture among the cities, which will need more planning to overcome.

The development of the Greater Bay Area will take some years from planning to implementation. Although we can currently see great potential in the area, it is unclear which direction the area will be heading to. While in the short- to medium-term, Vigers Research believes property in certain parts of the Greater Bay Area has potential to grow since the transportation network in the area is increasingly mature. For example, when the Shenzhen-Zhongshan Cross-river Channel (SZCC) is completed, the journey time from Shenzhen to Zhongshan, which is two hours now, will reduce to 20-30 minutes. Many people working in Shenzhen are expected to buy a home in Zhongshan as the housing price in Shenzhen is very high. Since Zhongshan’s housing price is still low,  which is only around one-fifth of Shenzhen’s, it has plenty of room to grow.

Although the Guangzhou-Shenzhen-Hong Kong Express Rail Link and the Hong Kong-Zhuhai-Macao Bridge are nearing completion and will bring a more convenient transportation network to the area, we do not expect property prices in Guangzhou and Zhuhai to increase substantially since they are already at high levels, not to mention Shenzhen. The housing prices in these cities are likely to remain stable in the short- to medium-term. Besides, Huizhou has announced that they plan to link five metro lines in Shenzhen to Huizhou. We can pay attention to the housing market and the details of the metro lines if it is approved by the State Council. On the other hand, those new transportation projects do not access to the southern parts of the Greater Bay Area. For example, going to Zhaoqing and Jiangmen still needs to rely on the old transportation network. We do not see any significant factors that will drive their housing prices upwards.

With the more sophisticated transportation network, Zhongshan will be the market with the most potential to experience increase in housing prices, especially when the SZCC is completed. Huizhou is another market we can pay close attention to if the metro links from Shenzhen to Huizhou are approved.

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