Commercial real estate in Greater Bay Area shows clear signs of revival

Total transaction volume for 2021 is expected to exceed the RMB50 billion (USD7.7 billion) mark 

According to the Greater Bay Area Commercial Real Estate Investment Market Review and Forecast 1H 2021 by Cushman & Wakefield, the rise in developments in the Greater Bay Area and the maturing of its transport network in recent years has led to changes in real estate investment across the region and has enabled industrial transformation. 

Foreign investors have been snatching up properties mostly in Guangzhou and Shenzhen, but they also have set their eyes on tier 2 cities. Apart from traditional developments like shopping malls and office buildings, investors have started to expand their portfolio to include new properties types such as data centres, cold chain, and industrial logistics. 

Growing interest in the region 

In 2017, when the Greater Bay Area initiative was launched, private investors and owner-occupiers expressed their interest in the region. Since then, commercial real estate (CRE) investment transactions surged, with Guangzhou and Shenzhen documenting RMB50 billion annual transaction value for four consecutive years. 

In Guangzhou, the number of small scale single-block buildings rose due to the abundance of technology, media, and telecom companies, which also prompted interest from owner-occupiers. Shenzhen, on the other hand, enjoyed an increase in transactions from major corporations that opted to relocate their headquarters. 

Opportunities for CRE investments skyrocketed further in 2019 when the “Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area” was officially announced. This development outline drove the appeal to other cities than Guangzhou and Shenzhen. 

Transaction value climbed RMB3.4 billion, around seven percent of the total, in 2020 compared to RMB2.7 billion, about four percent of the total, in 2019. More than RMB200 million or one percent of the total transactions were accounted for in the first half of 2021.  

Cushman & Wakefield forecasts the total transaction volume for 2021 to exceed the RMB50 billion mark, demonstrating investors’ growing interest in the region. 

These growing numbers have served as a good omen for both the commercial and residential PropertyGuru Asia Property Awards (Mainland China, Hong Kong, Macau) Developers, namely Financial Street (Beijing) Real Estate Co., Ltd, Shanghai Ruihong Xincheng Co., Ltd, Shanghai Ruihong Xincheng Co., Ltd, and Shimao Group Suhu Branch from Mainland China, as well as Henderson Land Group and Everlux Limited & Oootopia Hospitality Management Limited from Hong Kong, who have all been anticipating the recuperation of the region. 

Outshining NY Bay Area 

Greater Bay Area has also surpassed another milestone in 2021, as it tallies more Global 500 companies’ headquarters than New York Bay Area, reported China Daily. 

For the first time in years, the region is now home to 25 Global 500 companies, outranking the 24 headquarters in New York. 

Nevertheless, the Tokyo Bay Area still holds the most numbers among the four global bay areas, hosting 40 headquarters. San Franciso Bay Area, where Apple and Alphabet offices are, come in last with 10 Global 500 headquarters. 

Statistics reveal that 99 of the Global 500 headquarters are stationed in these four global bay areas, which are primary drivers of the global economy. 

The Greater Bay Area makes up the largest area with 56,000 square kilometres, followed by the Tokyo Bay Area with 13,600, the New York Bay Area with 21,500, and the San Francisco Bay Area with 18,000. 

More: Property prices in China’s Tier-1 cities jumps an average of 10.5% 

Manufacturing, finance, and innovative technology are the main industries in the Greater Bay Area, whereas finance, automobile, and petrochemical engineering top the Tokyo Bay Area. 

New York Bay Area accommodates finance, medical healthcare, and real estate sectors, while San Francisco Bay Area hosts technical innovation and professional services. 

World Bank data reveals that these bay areas are home to 60 percent of the globe’s major cities and its economy amount to 75 percent of the total global economy. 

Know of any award-worthy homes, condos, flats, or other real estate projects in China, Hong Kong, or Macau? Nominate them for the 2021 Asia Property Awards (Mainland China, Hong Kong, Macau) on or before 1 October 2021. Simply visit asiapropertyawards.com/award/mainlandchina/, asiapropertyawards.com/award/hongkong/, asiapropertyawards.com/en/award/macau/ for more details. 

Gynen Kyra Toriano, Digital Content Manager at PropertyGuru, wrote this article. For more information, email: [email protected].