Beijing, 21 October 2021—Cushman & Wakefield, a leading global real estate services firm, today released its THINK-IN report 2021 -China’s 14th Five-Year Plan - What’s Next For Real Estate.
K K Chiu, Chief Executive, Greater China at Cushman & Wakefield, said: “Looking broadly to the future, the 14th FYP is looking to further balance the social and economic differences between rural and urban residents. The plan is also looking to improve on the quality of innovation and double down on environmental sustainability. Many of these goals are expected to be assisted by China’s ‘New Urbanisation’ plan, and in particular, city cluster development.”
The Report reveals:
China’s 14th Five-Year Plan (FYP) includes a number of socioeconomic goals. Three areas which the plan is looking to further improve upon are:
- Innovation, technology and ‘new infrastructure’;
- Environmental sustainability, and;
- City cluster development.
Innovation, technology and ‘new infrastructure’
Technology is and will continue to be a key component in China’s development drive. Consequently, it is widely featured in the 14th FYP. When specifically looking at the technology sector in China, spending on research and development has played a large role in recent years in terms of advancing the industry.
When considering innovation, technology and ‘new infrastructure’, and the future impact this will have on real estate, a gamut of tech-related initiatives spring to mind.
- The emergence of 5G will generate change within China’s social and economic landscape. In China, based on an estimation from the China Academy of Information and Communications Technology (CAICT), the commercialisation of 5G will drive the scale of information consumption and the gross economic output to exceed RMB8 trillion and reach RMB10.6 trillion, respectively, from 2020 to 2025. Along with the development and gradual commercialisation of 5G technology, the industries which are highly related to 5G technology, such as cloud computing, virtual reality (VR), smart city technology, smart manufacturing and supply chain technology, smart building technology, etc, will bring huge changes to socio-economic development.
- Based on a forecast from 36 Kr, China's data centre industry scale is expected to attain RMB595.2 billion by 2025; three times the existing scale total. In 2020, data centres in China certainly garnered the attention of many investors and we expect this interest to continue to increase with the continued development of the data centre industry, the expansion of the REITs market and the growth of green financing in China.
- With expected increased investment in city infrastructure, smart autonomous vehicles (AVs) have taken the spotlight of late. Approximately US$80 billion has already been invested in connected autonomous vehicles (CAVs) worldwide, so it is only a matter of time before this new technology leads us to the future of urban transportation.
- Smart commercial building platforms will not only allow owners and operators of a smart commercial building to effortlessly achieve their objective for the property but will also allow the building to:
– Reduce water and energy usage costs;
– Alleviate any impact on environmental sustainability, and;
– Better attract and retain tenants. - Since the end of lockdown in China, new possibilities for smart working have been realised. Moving forward, many office employees in China want alternatives to their present work settings and want to experience more variety in how they work and more variety in where they work. Smart office pods offer a smart space where an individual user can focus on their work, can take a private call or participate in a conference call or webinar. The same smart space, if large enough, can also be used by a group of users to congregate for a meeting, for a discussion or for a brainstorming session.
Environmental sustainability
Ahead, China’s 14th Five Year Plan (FYP) looks set to build upon the environmental sustainability initiatives China has undertaken in the past. Strengthened climate and air pollution control measures will ensure the road ahead in the region will be healthier and cleaner as the country moves to carbon neutrality by 2060. Real estate in China also has a big part to play in this goal. Methods and technologies like green financing, renewable and recycled materials, smart devices and PPVC can effectively reduce the amount of energy used by and carbon emissions expended from buildings in China. Additionally, by structuring leases to enable commercial buildings to be more efficient and to achieve a smaller carbon footprint, even commercial properties that are not currently high performing can be transformed into greener and more cost-efficient spaces.
Commercial building investors, developers and landlords in China have to now understand the fact that over time, responsible investment principles and ESG investment have become more and more popular with capital, and this has also prompted investors and developers to transition from simply developing green buildings to making sustainable strategies the top business priority in accordance with the requirements of the capital market.
One of the plus sides for investors, developers and landlords in going green is that environmentally friendly commercial buildings often enjoy higher rentals and augmented market pricing. They are also often more resilient to any market downturns as they are still the location of choice for many occupiers.
City cluster development
The 14th FYP also sets out different requirements for city clusters, metropolitan areas, central cities, large and medium-sized cities, and counties. This is also the first time that "metropolitan areas" and related content are elaborated in a separate chapter in the medium and long-term plan for China's national development. City clusters in China, with central cities as their driving engine, are having an increasing impact not just on China’s economy but also on the global economy at large. These city clusters can bring together a large number of resources such as talent, transportation, and education. a closely connected economic network can also promote the rational layout of industries and effective distribution and utilisation of resources and thus boost the growth rate and scale of a region’s economy.
Shaun Brodie, Head of Occupier Research Greater China, Cushman & Wakefield, said: “Looking to the future, China’s 14th FYP will augment the quality of innovation, promote environmental sustainability and drive ‘New Urbanisation’. Real estate investors, developers, landlords and occupiers in China will have to carefully analyse these themes to fully understand the many ways they will impact property in the region. By doing so, their businesses, enterprises and organisations will be able to capitalise on the new business opportunities that will arise.”
Download the report.