Greater Bay Area property market’s future seen powered by economic synergies
Property markets in China’s Greater Bay Area will see an uptick in 2024, as businesses and communities find synergies within the 11-city economic powerhouse which has a GDP of US$2 trillion ($2.7 trillion) and a population of 86 million, experts say.
While new home sales performance has remained steady for nine mainland cities across the bay area during the past two years, prices dropped marginally as the region, whose GDP exceeds South Korea’s, felt the aftershocks of the Covid-19 pandemic. But these trends are about to reverse, experts say.
Enhanced cross-border payment measures, due to be launched on Feb 26, will enable Macau and Hong Kong buyers to purchase property in the bay area without the existing daily remittance cap of RMB80,000 ($15,200) in a seamless transaction process for real estate investments. Last September, Guangzhou relaxed home purchase restrictions for non-local residents and Dongguan allowed Hong Kong and Macau citizens to purchase homes irrespective of their length of residency. These moves are expected to facilitate economic growth and further integration within the bay area.
“We have observed an increasing number of Hong Kong residents go northbound for viewing properties since the ‘Northbound Travel for Hong Kong Vehicles’ scheme was rolled out [mid-last year],” said Ted Lam, Midland Realty’s managing director for the Greater Bay Area.
“The trend of ‘shopping northbound’ is also a good signal,” he said, adding that some of the latest measures announced by Beijing are expected to be one of the biggest boosts this year.
Transacted volume for first-hand homes across nine mainland cities stood at around 40.7 million sq m (about 438 million sq ft) in both 2022 and 2023, while prices slid 1.2% in 2023 versus 2022, according to data compiled by JLL.
But the other metrics for the region have shown an uptick. GDP in the region has grown to US$2 trillion in 2022, up 25% from US$1.65 trillion in 2019, when the blueprint for the development zone was outlined, while its population has surged to 86 million in 2022 compared with 68 million five years ago.
These outcomes have encouraged Beijing to step up the pace and further deepen ties. Last month, authorities unveiled measures ranging from broader individual investment channels to cross-border funding access for enterprises, to facilitate business links between the nine mainland cities with Hong Kong and Macau.
“These policies will ignite the vitality of the property market in the bay area,” Alan Cheng, Centaline Property Agency’s CEO for southern China and its general manager in Shenzhen, echoed views of Midland’s Lam.
Since the “16 Policy Measures” which would benefit Hong Kong were announced by the Leading Group for the Development of the Greater Bay Area, Hong Kong residents have been treated as local residents in purchasing properties in the mainland cities of the bay area, said Huang Shao-Mei Echo, CEO of New World China Land and executive director of New World Development Co.
“Following the adjustments on home purchase restrictions and the reopening of borders, there has been an increasing number of Hong Kong residents purchasing homes in the bay area,” Huang said.
Residents from Hong Kong and Macau have traditionally been big buyers of property in the mainland bay area cities, and the trend will intensify in the coming days, Centaline’s Cheng said, citing data compiled by his company’s Shenzhen division. In 2023, Hong Kong-based buyers accounted for 397 home transactions in Shenzhen, valued at RMB660 million, which was more than three times 2022’s tally of 127 deals. Transaction value rose by 53% in the same period.
“Smoother payment channels will boost demand,” said Cheng. “Moreover, easier movement of funds and people from Hong Kong and Macau to the bay area will in turn facilitate other business opportunities.”
Meanwhile, higher traffic in both directions is already being witnessed, triggering optimism.
“We are noticing a gradual improvement in sentiment with a pickup in home viewings from residents from Hong Kong and Macau buyers, reflecting a potential source of buying,” said Silvia Zeng, head of research for south China region at JLL, adding that mainland talents, boosted by Hong Kong’s Top Talent Pass Scheme, could also grow to be one of the major buyers in future.
Under the Top Talent Pass Scheme, those who earn HK$2.5 million ($430,000) or more annually or have graduated from one of the world’s top 100 universities with at least three years of work experience are eligible for a two-year working visa.
“Mainland Chinese have always liked Hong Kong for its lifestyle, beaches, hiking, lower taxes and the schooling system,” said Victoria Allan, managing director of real estate agency Habitat Property. “The talent scheme has attracted a lot of attention as it makes property transactions a lot cheaper. We have seen rentals going up on this and as they look to acquire, prices should move on the strengthening demand.”
Meanwhile, Zeng cautioned that the recovery from a three-year halt in travel and business activities during Covid-19 period would be gradual.
“It is time to ‘reconnect’ [each city in the cluster] and to strengthen business innovation, communication, and integration. The property market will gradually recover with more business interactions and cross-border travelling demands.”