What other cities are being heavily invested and laid out by real estate companies?, Number of cities outside Beijing, Shanghai, Guangzhou, and Shenzhen | Layout
Against the backdrop of intensified land market differentiation and declining investment willingness of real estate companies, which cities are still heavily developed by developers?
On the 21st, the China Index Research Institute released the "2023 Research Report on the attractiveness of real estate development investment in cities at or above the prefecture level in China", which comprehensively considers indicators such as population, industry and transportation, local government debt ratio, foreign trade dependence, and the number of Fortune 500 enterprises, and evaluates 297 cities at or above the prefecture level in China.
The report shows that in 2023, the real estate investment attractiveness of four first tier cities, Beijing, Shanghai, Shenzhen, and Guangzhou, ranked in the top four, while Hangzhou, Chengdu, Nanjing, Suzhou, Wuhan, and Xi'an ranked in the top ten in sequence.
From the perspective of specific cities, the investment attractiveness ranking of Beijing, Shanghai, Guangzhou, and Shenzhen remains unchanged, while the investment attractiveness advantage of first tier cities is obvious; Hangzhou's investment attractiveness has remained fifth in the country for six consecutive years; Chengdu, Nanjing, Suzhou, Wuhan, and Xi'an have large economies and populations, obvious industrial advantages, and strong market demand, ranking 6-10.
Looking back, Changsha, Chongqing, Hefei, Ningbo, Qingdao, Jinan, Tianjin, Zhengzhou, Foshan, and Dongguan rank 11th to 20th. Foshan and Dongguan fell to the 19th and 20th places respectively; Qingdao and Jinan have jumped by 2 and 4 places respectively compared to the previous year in rankings; Zhengzhou's investment attractiveness ranking has dropped to 18th place. The cities ranked 21st to 30th are Wuxi, Fuzhou, Xiamen, Zhuhai, Wenzhou, Nanchang, Shenyang, Shijiazhuang, Quanzhou, and Changzhou.
To measure the housing demand space of a city, the primary indicators are population size and population quality. At the end of 2022, the total population of the country experienced a decline for the first time in over 60 years, and the dividend of the total population weakened. Policies such as childbirth, household registration, and talent introduction also further affected the flow of population.
The report shows that from a population perspective, the population agglomeration capacity of some core cities in the Yangtze River Delta and the middle reaches of the Yangtze River will further manifest in 2022, with Changsha, Hangzhou, and Hefei ranking among the top three in terms of population growth in the country. The population in the Pearl River Delta, Beijing Tianjin Hebei, Central Plains, and Northeast China has generally declined, with Tianjin and Dongguan experiencing a significant decline in population, while Guangzhou and Shenzhen have also experienced a decline in population.
"Last year, the manufacturing and foreign trade industries in the Pearl River Delta were greatly affected by the epidemic, resulting in a decrease in employment in the short term. Except for Pearl River Delta, the permanent population of all nine cities in the Pearl River Delta decreased, with Dongguan and Guangzhou decreasing by 100000 and 76000 respectively. Shenzhen Special Economic Zone experienced negative population growth for the first time since its establishment, with a decrease of 20000 permanent residents," the report said.
At the same time, the population of the Beijing Tianjin Hebei urban agglomeration continues to shrink. In 2022, only a few cities such as Shijiazhuang, Tangshan, and Cangzhou have seen an increase in permanent residents, while Beijing and Tianjin have seen a decrease of 43000 and 100000 respectively. The population siphon effect of core cities in the central and western regions continues to show, with a permanent population increase of over 100000 in Xi'an and Guiyang, and a population increase of 76000 in Chengdu.
The report also examined the industrial economy and the number of top 500 enterprises. Among the top 500 new economy enterprises in China in 2022, the number of enterprises in the three cities of Beijing, Shanghai, and Shenzhen remained in the first tier, with a total of 216, accounting for a high proportion of 43.2%. Whether it is the top 500 of the new economy or the top 500 of Chinese enterprises, the number of enterprises in Beijing is far ahead, far exceeding other cities.
From a regional perspective, the overall economic strength and technological level of enterprises in the eastern region are strong, and the number of New Economy Top 500 enterprises also has a significant advantage, with 422 enterprises accounting for 84.4% of the total. There are 37 and 34 enterprises in the central and western regions, accounting for 7.4% and 6.8% respectively. The number of enterprises in the northeast is the lowest, with only 7 enterprises accounting for 1.4%.
If measured from the perspective of urban agglomerations, in 2022, with only 11% of land area, the economic scale of the five major urban agglomerations in China will reach 53%, the number of permanent residents will account for 42%, the sales area of commercial housing will account for 48%, and the investment in real estate development will account for 58%.
Among them, the Yangtze River Delta urban agglomeration, with its strong industrial foundation, has maintained economic vitality under the impact of the epidemic, continuously deepened regional coordination, and continued population growth. 14 cities within the urban agglomeration rank among the top 50 in terms of national investment attractiveness. Since 2023, the market sentiment in the region has gradually recovered, and the popularity of land auctions has also driven the real estate market to further stabilize.
At present, China's real estate industry is going through an important turning point. In 2022, the total population of China was 1.412 billion, a decrease of 850000 compared to the end of the previous year, marking the first decline since 1962. The urbanization rate of the permanent population reached 65.2%. The annual birth population was 9.56 million, with a birth rate of 6.77 ‰, setting a new low since 1949.
The report suggests that as the population size declines in the medium to long term, the total number of new houses is bound to decline, and the differentiation of the real estate market in different cities is becoming more apparent. The difficulty for real estate companies to choose cities for investment and land acquisition will also further increase.
Recently, Fu Linghui, spokesperson for the National Bureau of Statistics, also mentioned that this year, as the economy gradually recovers to a normal track, the real estate market has gradually entered a normalized recovery trend. From the situation in May, the real estate market is generally stable, but due to multiple factors, real estate development and construction are still relatively sluggish, and the real estate market is slowly recovering.
How real estate companies can survive in the new environment? According to Zhongzhi Research Institute, companies should choose urban preferred sectors, seize relatively certain market opportunities in uncertain market environments, and continuously improve their product and service capabilities. The core first and second tier cities, as well as the advantageous third and fourth tier cities in the Yangtze River Delta and Pearl River Delta, have outstanding resource gathering capabilities and great potential for real estate development and investment.
