China’s economy has entered a new era, the ‘new’ economy, which is led by technology growth and fuelled by innovation. This new economic era has seen a turning of the page – from a country that had been focused on development primarily through industry and dependent on investment and export-driven growth. In the process, China largely has shaken off the label of ‘Manufactured in China’ and has evolved to today’s moniker of ‘Created in China’ – the latter of which symbolises a vision for the future to drive economic growth and bring the country even greater prosperity.
China’s ‘new’ economy reflects the country’s embrace of three core elements, and these are namely:
- Smart – in terms of being tech-enabled and intelligent with the onset of the Internet of Things (IoT);
- Sharing – in terms of encouraging activities, behaviours and initiatives that promote collaboration and the efficient use of resources, and;
- Green – in terms of creating and promoting sustainable development.
China, and the real estate sector in particular, has embraced the three core elements in order to be at the forefront of technology, innovation and sustainable development.
As China’s overall economy is expected to continue to advance in significant ways, these three core elements will thereby only increasingly come into play.
Impact on Real Estate
Real estate properties in China are expected to be profoundly impacted now and in the future by the ‘new’ economy. This is given the fact that real estate, as a pillar of the overall economy, holds a vast number of touchpoints across a multitude of indicators – whether in terms of investment, consumer requirements, labour needs, space demand, energy consumption or resource use.
Ahead, the direction of real estate will undoubtedly be guided by the three core elements of smart, sharing and green. Each of the core elements contain a number of components that describe the ways in which the ‘new’ economy is being and will be manifested most intensely in the real estate sector. In particular, Cushman & Wakefield has identified 11 themes related to smart, sharing and green that are and will influence real estate in China. Namely, these are shown as follows:
Smart buildings – ‘Cognitive’ properties will become ever-more prevalent and will satisfy a growing user demand for occupied space that is capable of learning and acting in an independent manner.
Smart technology – Ground-breaking smart technologies like Blockchain, the Internet of Things and e-payment systems are transforming the ways in which commercial real estate is developed, used and traded.
Smart construction – New materials, technologies and construction methods are influencing the ways in which cities are being developed, providing China with new ways to make its built environment more sustainable.
Smart industry – Unicorns and tech-focused start-ups are being rapidly established in China, and these smart industry players have a massive impact on the country’s commercial real estate landscape.
Smart transportation – Automated driving vehicles could usher in a new era of urban transportation in China, prompting shifts in real estate to accommodate growing demand for highly-connected, fast and convenient methods of travel.
Shared workspace – The co-working office sector has become a global phenomenon that has caught fire in China as occupiers seek more flexible and cost-effective office space.
Shared living – Rising housing costs in many Chinese cities, coupled with the changing nature of lifestyle among millennials, are fuelling demand for alternative living spaces, which is reflected in the growing co-living movement.
Shared mobility – Shared modes of transportation, including rental bikes and ride-hailing platforms, have exploded in popularity in China as travellers seek convenient, cost effective and green journeys to their destination.
Green buildings – Green commercial real estate in China is set to grow further in popularity as more building owners and space users realise the many potential benefits on offer, including financial advantages and sustainability.
Green technology – As awareness about the importance of sustainability continues to spread in China, so more newly built and existing buildings will be required to install energy- and resource-efficient green technology systems.
Green financing – Green financial instruments and services have emerged as new tools to fund sustainable projects, which are key to building low-carbon cities and promoting green building development in China.
Download the report here to read the full insight into China’s ‘new’ economy.