China’s real estate industry foresees the prospect of new opportunities as the Chinesegovernment pledges steady and human-centered urbanization.
Just two weeks ago, at its first-ever top-level conference on urbanization, China vowed tobalance urban-rural development, pledging proactive and steady progress in promotinghuman-centered urbanization, which will further encourage domestic demand.
The statement came against the backdrop of China's rapid urbanization. By the end of2012, the country had 710 million urban residents, accounting for 51.27 percent of the totalpopulation, and it was estimated that city-dwellers would make up 60 percent of China’stotal population within the next ten years.
China will invest more resources in the less-developed central, west and northeast regionsto achieve balanced development, according to a statement released after a centralurbanization work conference, which was held on Dec. 12 and 13.
Housing demand will increase dramatically as China’s urbanization accelerates. With theurbanization rate increasing by 13 percentage points from 36 percent in 2000 to just under50 percent in 2010, China has added more than 200 million urban residents within thedecade. This population change has created a huge demand for housing. Assuming arequirement of 30 square meters of space for each resident, 200 million people require atotal of 6 billion square meters of accommodation.
“If industrialization increases, urbanization will create more need in the market. Researchproves that when the urbanization rate climbs by one percent, it brings benefits equivalentto that of ten trillion yuan in exports. Calculated against the current urbanization rate, totalsocial consumption can rise by one trillion to two trillion yuan. The annual investmentvolume would maintain more than two trillion yuan for 20 years,” said Gu Shengzu, amember of the NPC Standing Committee.
Before urbanization, housing demand in cities was generated by the natural increase in thepopulation and by the renovation of old housing stock. With the development ofurbanization, more rural people are now becoming urban residents, creating heavierdemand, which offers a huge opportunity to the real estate industry, according to DengJiahua, executive director of Shui On Land Limited.
“The faster urbanization develops, the more the real estate industry will expand. Duringthis process, cities will enjoy preferential policies and attract more investment. Real estateenterprises should seize this opportunity to undertake the construction of industrial zones,residential accommodation, and commercial facilities on primary and secondary land infast-growing cities,” said Deng.
