The Dream Factory of China

More intercity transportation projects within the Guangdong-Hong Kong-Macao Greater Bay Area should benefit Hong Kong, which will serve as a link between the region's cities, the managing director of a global property consultant based in the city tells Edith Lu.

At 7 am on Sept 23 last year, the G5736 became the first high-speed train to make a journey from Hong Kong to the Chinese mainland, as it departed from West Kowloon Station and moved into the dim morning light on its maiden trip.

One month later, cross-boundary shuttle buses drove onto the Hong Kong-Zhuhai-Macao Bridge, as the first sea span across the Pearl River Estuary opened to traffic.

With the release in February of a development blueprint for the Guangdong-Hong Kong-Macao Greater Bay Area - which is planning to build a rapid intercity transport network mainly with high-speed rail, intercity railway links and high-grade motorways - more transport infrastructure projects are expected soon.

The completion of future railway and highway infrastructures will allow Hong Kong to strengthen its competitive position within the Bay Area, said Nigel Smith, managing director of Colliers Hong Kong, a global property consultant.

He said the West Kowloon Station is likely to emerge as a mega-cross-boundary terminus, as it will provide not only high-speed rail services to the Futian, Shenzhen North, Dongguan and Guangzhou South stations, but also possibly to the stations in Lo Wu in Shenzhen and to Guangzhou East.

If the Zhanjiang-Shenzhen high-speed railway eventually stops at the Shenzhen North Station, it will effectively connect Hong Kong with other Bay Area cities on the west bank of the Pearl River such as Zhuhai, Zhongshan and Jiangmen, improving Hong Kong's high-speed railway connectivity to the core Bay Area.

Smith said he expects to see more infrastructure projects coming, as they will help Hong Kong connect with the mainland's high-speed railway system. And he is sure that is the key to success.

"Inevitably, some infrastructure projects, which we can see need happening, will then be forced to happen faster," he said.

Smith said the much-anticipated Lantau Tomorrow Vision project is another link between Hong Kong Island, New Territories North and Shenzhen's future central business district - Qianhai.

As Lantau Tomorrow Vision will be seen as Hong Kong's third metropolitan region of the future, after Central and Kowloon West, he considers it an ideal venue for mainland companies and foreign companies which are willing to do business in the Bay Area to set up offices.

"Mainland companies that plan to come down may need a middle ground between Central and Qianhai, or they want higher-quality property and a better living and working environment," Smith said. He said the Lantau Tomorrow Vision area is a perfect spot for that.

Forward-looking vision

The Hong Kong Special Administrative Region government revealed last month that the Lantau Tomorrow Vision project will have a projected cost of HK$624 billion ($79.5 billion), making it the most expensive infrastructure project in the SAR's history.

Secretary for Development Michael Wong Wai-lun said that the SAR government could recover the cost through land revenue, citing estimates by the Hong Kong Institute of Surveyors that the potential land revenue from private residential and commercial projects on the artificial islands could be between HK$974 billion and HK$1.14 trillion.

Smith, who has monitored the city's real estate market for nearly 30 years, said the SAR government is factoring in today's costs with future sales prices.

He said that property prices will go up over time generally. But the cost is not a key issue for him.

"The project will solve many many problems that outweigh the cost," Smith said. "If you don't do it, there could be bigger problems."

He said if houses and buildings are built too close to each other, the environment will suffer, and there will be nowhere to plant trees.

"We're not just looking at the cost of building it and then the return," but the cost of not promoting the Lantau reclamation project, he said.

Qianhai, the area that Lantau Tomorrow Vision will connect with, is in Nanshan district - the center of information-technology development in Shenzhen. Many technology companies now cluster in Nanshan, as they want to stay in the same neighborhood as tech giants Tencent and Huawei.

Expansion needs of existing companies have raised the demands for office space. According to property consultancy Jones Lang LaSalle, demand for prime office space in Shenzhen is likely to double by 2022, or about 1.4 million square meters on average annually from 2020 to 2022.

Cost of expansion

The phenomenon is quite common, just as "the lawyers follow the banks," Smith said. "They need to be close to their customers and other companies within the same value chain."

With rents for office space going up, whether a company should be set up in this expensive district depends on its business and the desire to be located there, he said.

It is a balance of the desire of locating in the cluster and the benefits of doing so, versus the cost and the effect it has on the business, Smith said.

As for whether now is a good time to invest in the Bay Area's property sector, Smith said everybody has a personal timeline. If you are an investor with long-term time horizon, the answer is absolutely "yes" for a first-mover advantage, he said.

"If you want your money to go further, it's a good time to buy."

But Smith suggested investors examine carefully the location of infrastructure, as the play for now would inevitably be to follow the infrastructure and people must understand it takes time for new infrastructure to go in.

Then, the quality value of the building should be watched closely. Investors need to pay particular attention to whether a building's attractive price is the result of inferior quality that will result in faster deterioration.