Hong Kong might have the world’s highest home prices, but it has become an unsurprising headline. But it was Shenzhen, not Hong Kong, that raised the most eyebrows, when the tech hub joined the top five priciest home markets in the world, according to CBRE’s Global Living Report in April.

This result was significant. Firstly, it reinforced the global credentials of Shenzhen. And secondly, it told us that an internationally high price tag has far more implications for individuals and businesses.

Shenzhen, along with Hong Kong, Guangzhou and Macau, sit at the core of the Greater Bay Area. As the long-awaited blueprint on the Greater Bay Area released earlier this year suggested, the region, empowered by these four cities, has the base and the promise of future growth to match it economically with other large bay economies in the world.

The roles of Hong Kong and Macau are clear. Despite the price tag, the sophisticated legal and finance systems in Hong Kong created a fertile ground for businesses and individuals to settle. This explains why most multinationals are still operating their regional headquarters in Hong Kong. Macau has already established a firm footing as a world-class tourism and leisure centre.

The strong fundamentals of Shenzhen and Guangzhou are recognised as well but less discussed in the context of their attraction to businesses and talents. This opinion is changing though.

Shenzhen is a thriving technology hub and the headquarters of many Chinese businesses. The city has also surpassed Hong Kong to become the largest contributor to the Greater Bay Area economy with its gross domestic product accounting for 22.3 per cent of the region’s total in 2018.

Shenzhen’s infrastructure and fundamentals also make it an attractive office market to many domestic and international businesses, especially after the launch of the Guangzhou-Shenzhen-Hong Kong Express Rail Link
last year, cutting the travelling time to 14 minutes between Futian in Shenzhen and Hong Kong.

But the rise of Shenzhen cannot be discussed without Guangzhou, which is also proving a magnet for office occupiers. Further by train, Guangzhou has closer bonds with Hong Kong, namely a common language, which helps to facilitate business communication.

Guangzhou is a transport hub and talent training ground in the Greater Bay Area. Its railways provide access to 210 cities across the country while its airports connect travellers to 42 countries around the world.

For any city, economic growth and talent are among the most important drivers. Guangzhou is rich in human resources, with more than one million highly educated students enrolled in colleges and universities, supplying a huge talent pool to the business community in the region.

Looking through a real estate lens, Shenzhen and Guangzhou combine to offer office occupiers with around 16 million square metres (172.2 million sq feet) of prime office stock, more than double the space in Hong Kong. Office space in the central business districts of the two cities are at a fraction of the cost compared with Hong Kong’s Central.

Offices in Shenzhen are currently leasing at an average of 210 yuan (US$30) per square metre per month, with some higher quality buildings in Futian leasing at more than 300 yuan per sq metre per month. Key financial firms and technology companies are typically clustering in the Futian, Caiwuwei and Nanshan submarkets, with Qianhai gradually emerging to become a business hub.

Guangzhou offers companies with more value-for-money options, with prime office space leasing at an average of 170 yuan per sq metre per month. Top quality buildings are leased at just below the 300 yuan mark. While most established companies have chosen Tianhe and Zhujiang New Town to be their home in Guangzhou, Pazhou has emerged as a new office submarket with various upcoming projects about to look for anchor tenants. Corporate occupiers can also obtain first mover advantage at a relatively low cost.

When real estate, talent and commerce are concerned, the Greater Bay Area draws strength from diversity. And it is the diversity of roles, industries and functions that will play an influencing role in becoming the world’s largest bay area economy.

Furthermore, the region will offer enterprises with tremendous opportunities in the next decade or two. This is already happening, with new industries emerging and cementing themselves in the international value chain. Companies are already showing keen interest to expand into this region, from both Hong Kong and mainland China. Demand for office and other commercial space will see a strong growth across at least the three key growth engines of Hong Kong, Shenzhen and Guangzhou. However, to unleash its potential, the region clearly needs multiple business hubs and will inevitably raise more eyebrows with its growth trajectory.

* Tom Gaffney is regional managing director for the Greater Bay Area & Hong Kong at CBRE