By David Green-Morgan on September 17th, 2018
Ever since the handover of Hong Kong in 1997 the debate has raged around how the territory would be fully integrated into Chinese society, the economy and centralized decision-making processes. In an auspicious move, on the 20th anniversary of the handover, President Xi of China announced the creation of the Greater Bay Area to deepen the cooperation between the Chinese mainland, Hong Kong and Macau.
The use of the term ‘Bay Area’ obviously draws comparisons with Northern California and the area around San Francisco and Silicon Valley. But the Chinese version is set to be on a much bigger scale, covering 11 cities and 120 million people, the same population as Japan. Economically the area is already one of China’s most prosperous accounting for 14% of China’s overall economic output (China Bureau of Statistics).
The cities of the Greater Bay Area – Hong Kong, Macau, Guangzhou, Shenzhen, Zhuhai, Foshan, Jiangmen, Zhaoqing, Huizhou, Dongguan and Zhongshan – already include some of the most active property investment markets globally. Hong Kong is currently the second most traded city globally with almost US$20 billion traded in the first half of 2018 alone. Guangzhou and Shenzhen also regularly make it into the top cities in Asia Pacific for investment transactions.
The majority of property transactions across the Greater Bay Area at present involve development sites, emphasizing just how much additional growth is possible in an area that has grown tremendously in the last 30 years. The infrastructure investment involving high speed rail, new roads and expanded port facilities will make the movement of goods, services and people easier and further bring Hong Kong and Macau into this expanded economic zone.
Hong Kong has traditionally been the jumping off point for global capital looking to invest into China. Alongside the physical improvements and opportunities this initiative will open up, the further integration of Hong Kong should make that investment process and movement of capital more straightforward and transparent.
However, even with the opening up of China in the last two decades, foreign capital remains in the minority. In recent years Hong Kong has also become a more difficult marketplace for international capital, with mainland Chinese investment overwhelming other sources. Across the Greater Bay Area, Chinese and Hong Kong investors dominate with only Singaporean and Taiwanese investors managing to have an impact.