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Hong Kong’s development plan in the Greater Bay Area and its impact on the real estate industry
The RICS Hong Kong Annual Conference in 2018 saw industry professionals and decision makers gather to analyse how Hong Kong can leverage its edge to steer the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) development. This year, a series of expert-led panels explored a possible blueprint for Hong Kong to capitalise on the vast potential unleashed by future growth.
As a sponsor of the event, we were immersed in the thought-provoking conversations and developed a better understanding of how Hong Kong can serve as the nucleus in the development of the GBA.
Plans for the GBA
The Greater Bay Area will see the collaboration and integration of the nine Southern China cities (Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen and Zhaoqing) and the two special administration regions (Hong Kong and Macau) allowing each area to make use of their comparative advantage to foster stronger economic growth and deepen cooperation. This initiative also aims to develop the 56,5000 square kilometer area into a more dynamic economic hub that is on par with other Bay Areas of the world, think San Fransisco, New York and Tokyo, and to cultivate a quality living circle for the region’s population of 65 million.
Impact on the real estate industry
This development will spark a significant increase in investment demand. While there will be demand for more innovative and ‘smart’ residential and commercial office properties as foreign, regional and local corporates acquire, evolve, expand and shift businesses across the GBA, one cannot underestimate the investment potential that will pour into developing the infrastructure of the area. This includes the development of schools, roads, recreational spaces and hospitals, to name a few.
While there will be a boom in construction, the Greater Bay Area is also confronted with unique challenges. The GBA connects cities that span across three separate jurisdictions and requires careful policy planning. This might mean creating new institutions to enable the efficient flow of people, goods and factors of production while maintaining a sound and accountable environment for businesses to thrive. The tax differences between mainland cities and the two special administrative zones make it difficult to incentivize Hong Kong and Macau talents to work in the mainland. There is also a lack of national recognition for some professional services, for example, surveying. More reforms need to be implemented in order to ensure that talents can flow freely within the GBA. Professionals with skillsets that can deal with the new ecosystem and investment models will be sought after and will need to be groomed.
As indicated by the National Development and Reform Commission, Hong Kong will consolidate and enhance its status as an international financial, transportation and trade center. It will continue to serve as a bridge for foreign investors into the mainland and provide financial instruments and capital raising for the various investment and development projects in the area.
Opportunities for real estate professionals
From a talent development perspective, it is critical for real estate professionals that were previously focused solely on Hong Kong or China projects to equip themselves with more financial and M&A knowledge, especially as cross border transactions and partnerships continue to grow. This will also prepare them for the rising number of opportunities generated from the One Belt One Road initiative.
It is paramount for Hong Kong to see the long term potential in the Greater Bay Area and to capitalize on its existing strengths, expertise and infrastructure while looking at ways to innovate and to establish itself as the lead in the region’s development. While it remains to be seen how the development of GBA will unfold, we look ahead with hope that the birth of a new hub will eventually lead to greater livability and opportunity for all its inhabitants.
Michael Page is the market leader in the Property & Construction recruitment space with a specialized team of consultants. Learn more about how you can leverage on our expertise to recruit for talent in this industry.