China's Greater Bay Area development push and what it means for Hengqin and Hong Kong
A new 2.2km light rapid transit line opened in December last year now links Hengqin and Macau.
The cross-border rail line is part of a suite of infrastructure initiatives—including tunnels, roads, and highways—aimed at strengthening Macau's integration into the Greater Bay Area (GBA).
It is also expected to drive population and business migration into Hengqin.
Hengqin was placed by the central government in Beijing under Guangdong and Macau in September 2021, through a co-management system known as the Guangdong-Macao In-Depth Co-operation Zone, or Hengqin cooperation zone.
The plan was part of Beijing's efforts to wean Macau off its dependence on the gaming sector from 80 per cent of its gross domestic product to 40 per cent by 2028, by diversifying its economy, according to official reports.
LOWER COSTS AND GREATER SPACE
These projects were slated for Hengqin to complement Macau's economy and offer additional industrial, office and residential space, as part of the GBA plan.
Measuring over 104 sq km, Hengqin is three times larger than Macau, offering investors extra space to grow their business.
AKL Intelligence Technology founder Ken Lai told CNA: 'In a well-established city, like in Shenzhen and Guangzhou, everything is there … They can't change things or adapt things for them to try new stuff'
Lai, who opened his robotics and artificial intelligence company in Macau in 2020, set up a bigger office in Hengqin in March this year to consolidate his teams within the GBA.
He added that his firm could conduct testing of unmanned systems in Hengqin because 'it is not that crowded'.
The firm's Hengqin office location also eased communication between their Zhuhai and Macau teams.
Hengqin authorities are also offering preferential enterprise income tax rates of 15 per cent for companies as well as funding to help businesses with hiring employees.
While some Macau businesses have expanded operations into Hengqin, challenges remain in attracting residents and businesses.
OFFICES TO HOTELS IN HENGQIN
More than 16,000 Macau residents currently live in Hengqin.
The island's authorities are expecting about 80,000 Macau residents to work in Hengqin and 120,000 residents to live there by 2035.
Amid these goals, newly built houses are still waiting for tenants, according to Macau media reports, and some businesses have noted a slow growth and improvement in infrastructure.
'We have 16 to 20 people. There are only three or four of them living in Hengqin,' said Lai, who still lives in Macau because his family and friends are residing there.
'We have more shops and restaurants in Macau. Hengqin's infrastructure, (like schools and hospitals are) building up, but there aren't many choices as well. They are improving but … not as fast as people would expect.'
Dr Pan Xuanming, a senior research fellow at think tank Guangzhou Institute of Greater Bay Area, told CNA's East Asia Tonight programme that while the cost of living in Hengqin is high compared to other Chinese cities, it is relatively low compared to Macau and Hong Kong.
'For many Macau residents, they are still looking into buying new apartments in Hengqin,' he added.
Pan said that traditional Chinese medicine (TCM), technology, cultural and tourism industries are important for the city.
'I envisage an increase of industrial development and an increase in Hengqin jobs that provide for Macau residents in the future,' he added.
With over 50 per cent of Hengqin's Grade A office buildings standing empty in 2023, according to a South China Morning Post report, the city has introduced policies to convert them into hotel rooms to serve a growing domestic tourist crowd.
HOTELS TO STUDENT HOUSING IN HONG KONG
Meanwhile, hotel rooms are being converted into student housing in Hong Kong.
China's efforts to develop the GBA has enabled a greater flow of talent across 11 Chinese cities, including Hong Kong.
While Hengqin is experiencing a slow rate of people moving in, Hong Kong is seeing rental spikes in neighbourhoods near universities.
Nearly 8,000 mainland students were given approval to study in Hong Kong in the first quarter of this year, compared to just over 3,000 in the same period last year.
With four Hong Kong universities rising in world rankings this year, the city has emerged as a popular education hub in the GBA.
Rent in neighbourhoods near universities have also increased by up to 12 per cent, making affordable housing a challenge for prospective students.
Investors like Hong Kong real estate giant Centaline Investment are attempting to fill the gap by 2 or 3-star hotels into a new category of private student hostels.
There are currently 10 such projects offered by various developers, providing nearly 3,000 beds at the end of last year.
The Hong Kong government has loosened up a zoning policy this month, speeding up hotel conversions to student hostels.
Centaline Investment bought over a mid-tier hotel last September for conversion into a hostel that will eventually offer 121 beds for students, complete with a communal kitchen, laundry and study areas.
The company's CEO Kavis Ip said that running student housing is different from operating a hotel, noting that students stay for a year instead of travellers who stay for a night or two.
'As a hotel, we (have) some back of the house spaces … (for) mattress, linen, cleaning things. But for student housing, we don't need that,' she said, adding that it means there is no need to comply with hotel licensing requirements.
Looking ahead, Centaline is planning to offer about 3,000 beds in the next two to three years. It is also setting up a platform to help asset owners with conversions and operate their properties as student housing.
'(We) help them to do feasibility studies … from the zoning perspective, the layout and also (their) location … for student housing? Then we will work out the business (and) renovation plan,' Ip said.
CHEAPER HOMES IN THE GREATER BAY AREA
Economic and social integration within the GBA has accelerated rapidly in recent years, thanks to new multiple entry visas for Hong Kong residents.
Hong Kong's cost of living, higher than most mainland Chinese cities, has also led to many residents going across the border for more affordable dining, shopping and housing options.
One such city that has seen Hong Kong residents buying up homes is Yunfu, the poorest city in Guangdong province.
The city has the lowest GDP growth in the whole province, but its cost of living is also lower than major cities like Guangzhou and Shenzhen.
Yunfu is benefiting from government efforts to revive China's property market that has seen a multi-year downturn since 2020.
When property sales plummeted, it set off a chain reaction, leaving developers to default on debts and construction projects unfinished.
As part of efforts to revive property demand in Yunfu, the Chinese government eased purchase restrictions last year for non-local buyers, opening doors to buyers from across the border with Hong Kong and Macau.
Residents from Hong Kong and Macau have bought apartments in the city, citing widespread use of Cantonese and the lower cost of living.
'This is around 55 sq m. The price is less than 5,000 Chinese yuan per square meters. We can save like at least five times than that of Hong Kong for a similar sized apartment,' said Hong Kong resident Edmond Chan, 49.
Mainland property agent Liu Kai Xin helped Chan to close the deal for his flat in Yunfu.
His company is among a growing number of firms tapping into the GBA market.
80 per cent of its clients are from Hong Kong and Macau, looking for affordable retirement homes, instead of buying for investment.
Chan added that the average price of private housing in Hong Kong is "maybe 20 to 30 times higher" than the median annual income.
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