China’s real estate industry foresees the prospect of new opportunities as the Chinese government pledges steady and human-centered urbanization.
Just two weeks ago, at its first-ever top-level conference on urbanization, China vowed to balance urban-rural development, pledging proactive and steady progress in promoting human-centered urbanization, which will further encourage domestic demand.
The statement came against the backdrop of China's rapid urbanization. By the end of 2012, the country had 710 million urban residents, accounting for 51.27 percent of the total population, and it was estimated that city-dwellers would make up 60 percent of China’s total population within the next ten years.
China will invest more resources in the less-developed central, west and northeast regions to achieve balanced development, according to a statement released after a central urbanization work conference, which was held on Dec. 12 and 13.
Housing demand will increase dramatically as China’s urbanization accelerates. With the urbanization rate increasing by 13 percentage points from 36 percent in 2000 to just under 50 percent in 2010, China has added more than 200 million urban residents within the decade. This population change has created a huge demand for housing. Assuming a requirement of 30 square meters of space for each resident, 200 million people require a total of 6 billion square meters of accommodation.
“If industrialization increases, urbanization will create more need in the market. Research proves that when the urbanization rate climbs by one percent, it brings benefits equivalent to that of ten trillion yuan in exports. Calculated against the current urbanization rate, total social consumption can rise by one trillion to two trillion yuan. The annual investment volume would maintain more than two trillion yuan for 20 years,” said Gu Shengzu, a member of the NPC Standing Committee.
Before urbanization, housing demand in cities was generated by the natural increase in the population and by the renovation of old housing stock. With the development of urbanization, more rural people are now becoming urban residents, creating heavier demand, which offers a huge opportunity to the real estate industry, according to Deng Jiahua, executive director of Shui On Land Limited.
“The faster urbanization develops, the more the real estate industry will expand. During this process, cities will enjoy preferential policies and attract more investment. Real estate enterprises should seize this opportunity to undertake the construction of industrial zones, residential accommodation, and commercial facilities on primary and secondary land in fast-growing cities,” said Deng.