Economic review

Property developers invest in small cities near major ones

2018-05-17 15:53:00 (Beijing Time)         CGTN

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Real estate developers have shifted their focus to smaller nearby cities as tighter housing sales policies continue in China's large cities.

Purchasing restrictions showed that buyers without local residence permits can still purchase apartments in some small towns near Shanghai such as Kunshan, Jiashan and Qidong. With increased demand in these cities, experts believe that investing in them promises good profits.

"Housing policies in towns near large cities are relatively looser. Quick turnover is the main sales strategy there. So to property developers, investing in small cities is a quicker way for them to get back a return," said Lu Wenxi, Senior Analyst at Centaline Property.

The short commute between cities gave the developers another reason to make the decision. For example, if you live in Kunshan but work in Shanghai, it takes you only a little more than 30 minutes to travel there every day by high-speed rail. In addition, a metro line linking the two cities is also expected to open by 2023.

Convenient transportation is not the only reason. Property developers' enthusiasm also stems from the integration of the Yangtze River Delta Region, including integrated public services.

Yan Yuejin, Research Director at E-House Real Estate Research Institute, said that many services could close the gap between Shanghai and the small cities nearby.

"Transportation is one of the most obvious signs of Yangtze River Delta integration. The integration of the region's social security, health insurance, and public savings funds will follow, and reinforce this. That will reduce the gap between Shanghai and the smaller cities," Yan said.

As a result, property investments in smaller cities near Shanghai are seeing significant growth.

In 2017, property investment in Jiaxing, which is some 100 kilometers from Shanghai saw year-on-year growth of 50 percent. Other nearby cities around Shanghai including Kunshan, Nantong and Jiashan have also seen large developers coming in. The push for integration in the Yangtze River Delta is just one example of what is happening all over China. The country's other mature urban areas such as the Beijing-Tianjin-Hebei metropolitan area and the Pearl River Delta region are witnessing the same trend.

In addition, the Ministry of Housing and Urban Rural Development's plan is that 1,000 special towns are to be built near the country' large cities by 2020 to provide more convenient living and working spaces for residents.