Hong Kong to drive GBA's second stage of growth

It will provide a gateway to global capital markets for mainland Chinese firms in the region.

Hong Kong is expected to be one of the key drivers to lead the Greater Bay Area’s (GBA) next stage of growth, according to JLL’s recently published whitepaper. Hong Kong’s global financial hub status is said to help the GBA in developing its financial and professional services.

JLL notes that Hong Kong’s key role will be to provide a gateway to global capital markets for mainland Chinese firms in this region, which will support GBA’s next stage of growth and will require the development of a strong service sector.

From September 2019 to February 2020, 17 firms originating from Guangdong submitted IPO applications to the Stock Exchange of Hong Kong (SEHK), versus 15 in total to the Shanghai and Shenzhen Stock Exchanges. This illustrates that the option to launch an IPO via SEHK opens much needed financing opportunities to mainland Chinese firms in the GBA.

It is also expected that within the next five years, beyond the three core cities of Hong Kong, Guangzhou, and Shenzhen, growth drivers will come from three important city clusters—Hong Kong-Zhuhai/Macau-Shenzhen, Shenzhen-Zhongshan and, Shenzhen-Dongguan-Guangzhou-Foshan. This is said to bring new demand for various property sectors, which will create opportunities for developers and property investors, according to Nelson Wong, Head of Research at JLL in Greater China.

JLL Macau and Zhuhai managing director Gregory Ku believes that Macau and Zhuhai will see more opportunities with more transport infrastructure like the Tuen Mun-Chek Lap Kok Link.

Furthermore, transit-oriented development (TOD) projects will likely be promoted by local governments in upcoming areas of the GBA to attract experienced investors, which are expected to become a preferred mode of entry for foreign or Hong Kong developers and investors.

In the office market, GBA initiatives have helped to drive rapid growth in the TMT and finance sectors, leading to a significant surge in absorption in both the Guangzhou and Shenzhen Grade A office markets in the last five years.

JLL notes that whilst the unfolding coronavirus situation means that office demand in GBA may face strong pressure in the short term, medium- to long-term growth predictions remain favourable.