Behind Shenzhen’s continuous “business-to-housing”: population inflows and industry relocation

Reporter｜Zhang Ziyi

In order to meet the market demand and rationally utilize the land, Shenzhen has changed the land use nature of several commercial plots to residential plots.

On October 18, the Shenzhen Municipal Bureau of Planning and Natural Resources issued a notice on the official website, which will be “commercial-to-residential” for many plots located in the core area of ​​Longhua New City, Bao’an Central District, Bao’an International Convention and Exhibition City, and Guangming Central District. Planning adjustment, from the previous commercial office land to residential land.

It is not uncommon for Shenzhen to adjust “commercial land to residential place”. After all, “controlling the supply of commercial land” is an important trend in Shenzhen’s land supply-side reform in the past two years.

According to the “Shenzhen Construction Land Supply Plan for 2021”, the planned land for suppliers in 2021 accounted for 4.6% of the total planned supply, a 51% decrease from the 2020 supply. In the “Shenzhen 2021 Construction Land Supply Plan”, commercial land only accounts for 2.8% of the total planned supply.

In July last year, Shenzhen issued the “Several Measures on Further Increasing the Supply of Residential Land (Draft for Comment)”, which will ensure that the per capita housing area of ​​the city’s resident population reaches more than 40 square meters by 2035, and the annual residential land supply will not be limited in principle. Less than 30% of the total construction land supply. It is planned to increase the proportion of residential land, allowing commerce to be used for residential purposes, 30% of which are commercial housing and the rest for public housing.

Regarding the nature of the land use change in Shenzhen, Wu Rui, managing director of Savills Shenzhen, believes that this is a good phenomenon, because the supply of commercial land does not match the current demand, which shows the efficiency of government administration It is market-oriented and effective. From a micro level, in the past year, if the land auction was of a commercial nature, developers generally did not dare to auction it, and it was better to sell purely residential land.

Li Yujia, chief researcher of the Housing Policy Research Center of the Guangdong Provincial Urban Planning Institute, also said that there is currently a serious surplus of commercial offices in Shenzhen. The vacancy rate of commercial offices in central districts such as Futian and Qianhai in Shenzhen has increased. If there is no change, according to the existing planning and development, Shenzhen will increase the volume of commercial offices by about 100 million square meters, reaching a volume of 260 million square meters. Due to the vacancy of commercial offices, low utilization efficiency, and after industrial transformation, emerging companies have reduced demand for office space, and Internet + has also led to a decline in demand. Therefore, the new idea of ​​Shenzhen is to control the commercial office and increase the residence.

Due to the large supply of commercial land in Shenzhen in the past, the Shenzhen office market has been in a state of “oversupply” for a long time, the vacancy rate has risen, and the net absorption has declined.

According to statistics from Savills, as of the end of the third quarter of 2022, Shenzhen’s net absorption decreased by 41.7% month-on-month. In this context, with the impact of new projects entering the market, the city’s vacancy rate rose by 0.5 percentage points month-on-month to 23.4%.

By the fourth quarter of 2022, Shenzhen is expected to have six new projects delivered to the market, bringing about 548,000 square meters of new supply to the market.

The stock and future supply of Grade A office buildings in the main areas of Shenzhen are also quite high.

Statistics from Cushman & Wakefield show that by the third quarter of 2022, the stock of Grade A office buildings in Luohu, Futian, Nanshan, and Baoan reached 541,800 square meters, 3,254,000 square meters, 3,067,000 square meters, and 268,000 square meters, respectively. The vacancy rates were respectively 19.8%, 18.5%, 27%, 29.5%.

Nanshan District will have a large supply of office buildings in the future, and Bao’an District has the highest vacancy rate of office buildings.

In the past two years, Shenzhen’s “commercial-to-residential” plots are also mostly located in areas such as Bao’an, Longhua and Guangming.

In May last year, Shenzhen has changed a total of 13 commercial or industrial land into residential land and public land for education. Area and Pingxi area, continue to increase housing supply.

Affected by factors such as industrial transfer and agglomeration, the above-mentioned regional commercial office markets have problems of high stock, low net absorption and high vacancy rate.

In the second round of centralized land supply in Shenzhen this year, the A001-0212 plot in Baozhong was passed in. The plot is located next to Bao’an Metro Station on Line 11. The location is excellent, but the saleable residential area is less than 50% of the total GFA.

At that time, a person from a Shenzhen real estate company told Jiemian News: “There is no enterprise in the Baozhong plot, which means that the proportion of commercial land is too high. Now the developers of the land with commercial offices do not want to take it too much, and the recovery of funds is relatively slow.”

In the Shenzhen land market, the current commercial land is not a good time for developers to invest, and commercial land other than Nanshan, Futian and Luohu is even more unpopular.

Li Yujia believes that the existing commercial offices are now adjusted to residential properties, and the procedures are very troublesome. Planning, natural resources, housing construction and other departments need to be further coordinated in terms of planning, land use attributes, fire protection, and safety. It is the shortage of rental housing supply for new citizens and the high rent. Instead of turning it around after it’s built, it’s better to turn it around at the end of the land.