Cross Border Luxe
Hong Kong isn't the only location for luxury residential property in the Greater Bay Area.
When renowned British interior designer Kelly Hoppen was tapped to create interiors for the high profile One Shenzhen Bay, it was taken as a sign that Shenzhen had come of age. It was no longer Hong Kong's playground nor its manufacturing-reliant little brother, where you could get pirated DVDS and cheap foot massages. It was a first-tier city all its own. When Singapore-based prestige design firm Wilson Associates was called upon by the Huafa Group to create luxury, international-style model villas for its exclusive Huafa Hills development in Zhuhai, it was official: luxury in the Greater Bay Area now extends beyond Hong Kong, Macau and Guangzhou.
The Fundamentals
It's been well documented, now, that the emerging Greater Bay Area (Gba)—not to be confused with the original Bay Area in California—is an industrial force to be reckoned with. Comprising of nine mainland Chinese cities and two SARS: Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen, Zhaoqing and Hong Kong and Macau, the GBA has all the elements it needs to be a luxury residential hub as well.
The GBA boasts an economy in the neighbourhood of US$1.4 trillion. That's an economy that puts it behind only the Tokyo Bay Area (US$1.9 trillion) and the New York Bay Area (US$1.7 trillion economy). The San Francisco Bay Area has the smallest economy of the big four (“only” US$793 billion), but not surprisingly the highest per capita economy, at US$102,000. The GBA'S is just US$20,000, but the population is nearly 10 times the size (7.7 million people versus 68 million).
According to CBRE research from late 2018, the combination of dedicated regional core buildings, creation of infrastructure and transportation hubs, industry upgrades (from manufacturing soaps and toasters to biomedical equipment and communications gear) and population growth are positioning the GBA for a bright property future. Value added industries like the aforementioned high-end manufacturing, technology, logistics, entertainment, financial services and pharmaceuticals will increase demand for premium property across the board, particularly in places such as Hong Kong, Guangzhou and Shenzhen. GBA cities will see new demand for Grade A offices, retail, industrial and hotels—and for luxury residential property.
Luxury for All
According to Knight Frank's Hong Kong and mainland property market forecast for the remainder of 2019 (issued before the first demonstration in June), prices in Hong Kong were a Gba-best RMB 149,000 per square metre (HK$15,000 per square foot). But prices in Shenzhen were sitting at approximately RMB 58,500 per square metre (HK$5,955 per square foot)—predicted to match Hong Kong's in a decade—followed by Guangzhou at RMB 33,600 (HK$3,400 per square foot). At the other end of the spectrum were Zhaoqing and Jiangmen, at RMB 8,000 and RMB 9,000 per square metre (HK$815 and HK$920 per square foot), respectively. At those prices it's easy to see why Hongkongers are flocking to locations such as the mid-priced Zhuhai, Foshan and Zhongshan (averaging HK$1,315 to $2,130 per square foot). According to the SCMP, Hong Kong purchasers spent HK$11 billion on GBA property in 2018. The popular thinking is that market fundamentals like the ones detailed by CBRE and the Hong Kong-macau-zhuhai Bridge will make the purchase a lucrative investment in the near future.
One Shenzhen Bay led the charge when it launched in 2014. The seven-tower development designed by creatives including Hoppen, Steve Leung, CCDI, AUBE, Yabu Pushelberg and Kohn Pedersen Fox Associates (KPF) features a Raffles hotel, office tower and nearly 500 luxury residences.
But locations such as Zhuhai, Foshan and Zhongshan are attractive for their affordable luxury. Developer Times China has no less than three super-developments in the works, in Foshan, Zhuhai and Guangzhou. Each is well connected to other parts of the GBA, located within a strong school network, surrounded by greenery, sits in close proximity to business districts and promises a state-of-the-art clubhouse. Times China's new projects are priced at approximately HK$2,000 per square foot. In Zhongshan, a “garden-style community” boasting a landscaped garden measuring roughly 430,000 square feet, swimming pool, multiple sport venues and a children's play area—all standard luxury amenities now—started prices at HK$1,600 per square foot.
Given the potential for a 50-minute commute on the Guangzhou-shenzhenhong Kong Express Rail Link, the affordable luxury in the GBA could be one way to ease Hong Kong's land and housing shortage. “Corporations will have the opportunity to expand their office operations in these leading cities, alleviating the low vacancy and supply pressure in Hong Kong's office market,” CBRE Hong Kong, Macau and Taiwan managing director Tom Gaffney wrote in the SCMP when the GBA plan was announced last year. Where business goes, so too will residences, and with the depreciation of the RMB, Hong Kong's enquiries into GBA property will continue to climb.
GBA cities will see new demand for Grade A offices, retail, industrial and hotels— and for luxury residential property.