Foshan leads the real estate rally among Greater Bay cities as speculators get ahead of curve
- Foshan home prices have jumped 35 per cent since July 2017 to rank No 1 among the 11 cities tracked in the Greater Bay Area
Foshan, an industrial city next to Guangzhou, has experienced the biggest gain in property prices in the last 18 months among the 11 cities in the Greater Bay Area plan, according to an index by Hong Kong property agent Centaline Property.
As of January, prices for new and used homes in the city have risen 35 per cent since July 2017, according to the Centaline Greater Bay Area Index. Zhaoqing ranked No 2 with a 22 per cent gain, followed by Jiangmen with a 16 per cent gain and Hong Kong with a 6 per cent rise. Zhuhai was the only city that saw a decline, with prices dropping 4 per cent over the 18-month period to January.
The index uses a baseline calibrated at 100 on July 2017, tracking nine mainland cities and Hong Kong and Macau under the Greater Bay Area. Both new and second-hand properties are measured in the index, weighted by the annual GDP of each city.
“Since 2017, Guangzhou has introduced strong purchase restrictions. Plus, Foshan’s property prices are around half of that of Guangzhou, so some customers have turned to Foshan,” Terence Law, senior principle project director at Centaline said.
Foshan, formerly known as a manufacturing hub for air conditioners and refrigerators, has benefited from the development plan linking the city and its neighbour Guangzhou to form a mega-city, he said.
With the introduction of infrastructure such as the recently opened Hong Kong-Zhuhai-Macau Bridge and high-speed rail links, smaller cities connected by these transport modes have become attractive destinations for Hong Kong residents looking to buy on the mainland.
“From what we’ve seen, Hong Kong residents purchasing properties in Zhuhai, Zhongshan or other Greater Bay Area cities as an investment have increased. They’re positive about the real estate prices there and have sped up their buying,” Law said.
In Zhongshan the average new home price rose to 11,000 yuan (US$1,626) per sq m in 2018 from 5,882 yuan per sq m in 2015, according to the city’s statistics bureau. In Zhuhai, average new home prices rose to 21,450 yuan per sq m in 2017, up from 14,200 yuan per sq m in 2015.
Administrative measures such as home purchase restrictions and price caps have affected prices in Guangzhou and Shenzhen as well as smaller cities.
In 2017 the number of home sales in Zhuhai plunged 80 per cent from levels in 2016, amid new rules that ban non-locals from buying homes unless they have paid local social security for five consecutive years. Zhuhai’s property market was at 96.1 in January from 100.8 a year ago, according to the Centaline Greater Bay Area Index.
The long-term outlook for the property market in the Greater Bay Area is dependent on the general policy environment and implementation of the development plan – which still faces uncertainties.
“The GBA involves 11 local governments and the central government, which may lead to delays in decision making and project approval,” said Raymond Cheng, head of Hong Kong/ China property research with CGS-CIMB Securities.
Assuming annual price gains of 5 per cent, the region’s annual collective property transaction value could rise to 2 trillion yuan in 2026 from 1 trillion yuan in 2016, based on 15 per cent population growth for the nine cities, according to CGS-CIMB Securities.
