On Oct. 18, the government of Zhuhai will auction a large plot of land near the bridge to Hong Kong with a minimum price of 5.64 billion yuan (US$790 million). The land will be used to build a large hotel and exhibition center.
The 226,000 square meter lot, located north of Zhuhai port, is the largest to go on sale since the announcement of the Greater Bay Area (GBA) in 2017. The level of interest and prices bid will show how successful – or not – the city has been in exploiting the GBA brand.
The successful bidder must sign a letter of intent with at least one global resort brand, bring in at least 20 foreign companies within three years, and build at least two hotel projects. These conditions are designed to attract Hong Kong and other large developers.
The GBA represents a once-in-a-lifetime opportunity for Zhuhai, a city created only in 1980 as one of China’s four special economic zones (SEZs). For years, its GDP lagged behind those of Shenzhen and Xiamen, mainly because it was not linked to the national railway network and the economy of neighboring Macau was so dependent on gambling.
But this has changed dramatically in the last 10 years, with the completion of a cargo and passenger line to Guangzhou in 2012 and the opening of the bridge to Hong Kong in October 2018.
Last year it posted a GDP of 291.5 billion yuan, an increase of 8 percent over 2017. The manufacturing and service sectors each reported GDP of 143 billion yuan. As of the end of 2018, it had attracted 19,072 foreign investors with total contracted foreign investment of US$66.67 billion and actual foreign investment of US$30.57 billion.
Since 1980, the city government has pursued a well thought out development strategy – rejecting polluting industries, keeping industrial, commercial and residential areas apart, a low population density and a high ratio of parks and green space. It has a population of 1.3 million. Among mainland cities, it is one of the most pleasant to live in.
MICE (meetings, incentives, conventions and exhibitions) is one of Zhuhai’s most important industries. In 2018, it received 5.14 million visitors, an increase of 2.9 percent over 2017, of whom foreigners accounted for 675,100, up 7.3 percent, and Hong Kong, Macau and Taiwan people 4.46 million, up 2.2 percent. Of these, 3.26 million stayed in the city at least one night.
Those bidding for the hotel site bet that the MICE sector will continue to grow rapidly over the next 20 years.
In 2018, the Gongbei border post between Zhuhai and Macau recorded 134 million crossings, up 5 percent over 2017. It was the busiest border post in China for the seventh consecutive year and one of the busiest in the world.
Many travellers gamble in Macau but stay in Zhuhai, where hotels, restaurants and other services are significantly cheaper.
One important part of Zhuhai is the Hengqin New Area, which borders Macau. Its GDP last year was 24.5 billion yuan, more than triple the 6.8 billion in 2014. It is a tourism and leisure district, aimed at complementing the casinos of Macau. It is home to the Chimelong Ocean World, which attracts 10 million visitors a year.
The bidders will also bet that passenger traffic on the bridge to Hong Kong will grow significantly from current levels. It is restricted by the limited number of licences issued to drivers. Tour buses to Macau and Zhuhai account for the largest number of travellers.
The future of Zhuhai, and of the hotel project, also hangs on the growth of its property market. Investment in this sector in 2018 was 78.7 billion yuan, up 18.2 percent over a year earlier, with growth of 41.4 percent in units from 90 to 144 square meters and falls of over 24 percent in those above 144 square meters and in villas and luxury apartments.
Developers sell not only to Zhuhai residents but also retirees, people from north and central China who buy winter homes, and Hong Kong and Macau residents.
The city government hopes that the new bridge will attract thousands of Hong Kong people to buy homes in Zhuhai that they cannot afford at home.
But the GBA is a mixed blessing for Zhuhai. It is competing intensely with the other 10 GBA cities for MICE and business and holiday travellers. The excellent rail and road system created by the GBA makes it easy to reach Zhuhai – and just as easy to reach the other cities.
Whoever wins the bid on Oct. 18 is making an expensive bet. Many of the factors he needs to succeed are outside his control.
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