Guangzhou: Fast Growing Region for Property in China

The rapid expansion of the investment property market in China has led to increased international awareness of the broad opportunities that exist across both the residential and commercial sectors.  For the average investor however it’s hard to get a handle on which parts of the country are ripe for investment because China is vast and its property markets are diverse – today we focus on Guangzhou which is a fast growing region for property in China and an area interesting for investors.

Guangzhou is in Southern China, it’s an incredibly important business centre which has grown from its ancient origins as a trading port on the Pearl River.  The city is a fast paced, young, vibrant and dynamic city that contrasts sharply with many people’s perceived image of China as a rigid and authority driven nation.  Driving the growth of the economy and property market in Guangzhou is the overall positive and successful business environment.

The business environment has improved dramatically as a result of substantial funds being ploughed into massive infrastructure improvements, it has expanded thanks to the entire region becoming wholly more accessible through the brand new Baiyun International Airport and overall Guangzhou’s commercial hub has developed rapidly with the inward flow of multinational companies grabbing market share and establishing their positions in this, one of the fastest growing regions in China.

Locally the population has had an economic boost as well following on directly from the creation of a buoyant employment market in Guangzhou – this means that the residential property market is actively in demand from potential tenants and purchasers which means that base prices and rental rates are rising as is international property investor interest.

A more affluent population has also created an incredibly exciting retail market in Guangzhou which is expanding dramatically.  International retailers are now free to operate in China following the 2005 decision by the government to abide by the terms set out by the World Trade Organisation to open up the retail market to global competition.

Rapid expansion in the retail market has resulted in all prime space being leased and developers falling over themselves to catch up with demand; it has also helped boost GDP growth figures in Guangzhou to 14.2% in the first 6 months of 2006!  Naturally enough this massively strong market sector is seeking to expand which is putting pressure on the retail property market and causing leasing rates to shoot up and competition for the best spaces to become fierce.

An investor looking for an aggressive market to attack could likely do very well from the retail sector of the commercial property economy in Guangzhou.

Finally the office market – the Grade A market has expanded rapidly and until a further million or so square meters of Grade A becomes available over the next year and a half the market will be being squeezed from all angles as demand intensifies.  Vacancy rates are falling sharply and rental yields are expanding for those lucky enough to have bought in early.  Demand has also rapidly grown for Premium Grade A space as multinationals flood in to Guangzhou to establish their presence in this, one of the fastest growing areas of China – according to the Managing Director at Jones Lang LaSalle in Guangzhou the Premium market will outperform the Grade A market in the coming months because demand is actually increasing.

Guangzhou has all of the required ingredients necessary for sustained economic development and continued growth in the property sector meaning that for investors looking for an entry point into China, Guangzhou which is a fast growing region for property in China could well be the right place to begin.

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