Investors curb enthusiasm for China’s Greater Bay

By BLOOMBERG

HONG KONG • China’s grand plan to integrate nine cities in Guangdong with Hong Kong and Macau to create a sprawling megalopolis that would rival California’s Silicon Valley isn’t providing the kick to property investment you might think.

Cross-border real estate investment into mainland cities in the so-called Greater Bay Area is expected to fall as much as 33% in 2018, figures from Knight Frank LLP show.

House-purchase controls in the larger cities may have damped developers’ appetite to bid for land, according to an expert. “Limited supply of high-quality commercial buildings has also played a role,” he said.

It’s not a promising start for the Greater Bay Area, which is forecast to have a GDP of US$4.6 trillion (RM19.32 trillion) — more than Germany — by 2030, up from about US$1.5 trillion last year. Hopes for growth have been pinned on the recent opening of the Hong Kong–Zhuhai–Macau Bridge and the Hong Kong section of a high-speed rail line that will shorten the travel time between the mainland and the former British colony.

Capital flowing into property investments is expected to be concentrated in tier 1 cities, running counter to China’s goal of speeding up development in second and third tier centres.

Outside of Shenzhen and Guangzhou, most Greater Bay Area cities are considered third or fourth tier. China International Capital Corp is forecasting home prices in those areas to fall in 2019 amid a broader softening housing market.