By Sam Farrands, Tao Zhangqi, Zhao Xianlong, Lin Jia and Deng Yong King & Wood Mallesons

The most significant Belt & Road Project, the Greater Bay Area Initiative is the central government’s plan to link the cities of Hong Kong, Macau, Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen and Zhaoqing into an integrated economic hub.  The current population of the Greater Bar Area is approximately 68 million people with a combined GDP of over US$1.3 trillion.  By 2030 it is forecast to grow to 86 million, with GDP expected to exceed US$4.6 trillion.

By way of comparison set out below are the current population and GDP numbers for long-established economic hubs:

Location Population GDP
Greater Tokyo 44 million US$1.8 trillion
San Francisco Bay 7.6 million US$0.8 trillion
New York City 8.6 million US$1.7 trillion

Transport Infrastructure

To encourage this growth, significant investment is being made to link the cities in the Greater Bay Area, including the development of road, rail, seaport and airport infrastructure such as:

  • the Hong Kong – Zhuhai – Macau Bridge, which will reduce travel times[1] between Hong Kong and:
  • Zhuhai, from 60+ minutes to 40 minutes; and
  • Macau, from approximately 60 minutes to 40 minutes;
  • the Guangzhou – Shenzhen – Hong Kong Express Rail Link (Hong Kong section), which will reduce travel times[2] between Hong Kong and:
  • Guangzhou (south), from 2+ hours to 48 minutes; and
  • Shenzhen, from 65+ minutes to 23 minutes;
  • the Humen Bridge No. II;
  • the Shenzhen to Zhongshan Bridge;
  • the Macau – Zhuhai new border crossing facility.

The above list is only a small sample of the many transport infrastructure projects that are being, or will be, undertaken as part of the Greater Bay Area Initiative.

Social Infrastructure – the interesting opportunity

As the benefits from the integration of the region are realized and as the region grows in both population numbers and wealth, there will be an increasing demand for social infrastructure, such as entertainment, sports and recreation facilities.  Although Hong Kong and Macau have a head start in terms of existing social infrastructure, in order to satisfy the increasing demand of the domestic population and the growing tourist visitor numbers, significant investment will be necessary to improve the existing, and develop new, infrastructure and bring the major cities in the Greater Bay Area up to a comparable level.

The scale of the social infrastructure demands in the Greater Bay Area and the speed at which those infrastructure needs will be met is at a level that reflects China’s rapid pace of development.  Below are examples of the categories of social infrastructure and the development opportunities that exist.

  • Sports

The Chinese Government has an aggressive plan to grow the sports industry to an RMB7 trillion industry by 2025[3], with the Guangdong sports industry to reach RMB900 billion by 2025[4].  To achieve these goals ambitious targets have been proposed, including the development of a major community sports park in every city in Guangdong by 2025 and 3,000 new soccer pitches by 2020[5].  In addition the Hong Kong Government proposes HK$20 billion of investment in community sports facilities by 2022[6].

  • Convention / Exhibition space

In 2016 Hong Kong held more conference / exhibition meetings than any other city in the Greater Bay Area.  However, in the Asia Pacific region Hong Kong was ranked fifth overall in terms of number of conference / exhibition meetings held.  Macau was ranked 17th, Guangzhou 37th and Shenzhen 51st[7].

As the Greater Bay Area becomes increasingly connected as an economic hub there will be opportunities for significant investment in conference / exhibition infrastructure.  In Hong Kong, Guangzhou and Shenzhen alone exhibition space is expected to grow to over 1,400,000 square meters in the 2020s from the existing combined space of approximately 800,000 square meters[8].

  • Cultural Centres

The Greater Bay Area has no museums that are ranked within the top 20 globally and only one museum ranked within the top 20 in Asia Pacific region.  As part of the Greater Bay Area positioning itself as a global hub, in competition with other developed hubs, it is expected that investment in all types of cultural centres, including museums, will be a focus of the government.

  • Amusement Parks

In 2016 Hong Kong had the 17th and 18th most visited amusement parks in the World, while Guangzhou had the most visited water park in the World[9].  There is already significant demand for amusement parks in the region, which demand is forecast to increase with the development of the Greater Bay Area.  To meet this demand additional facilities will be required in addition to the following expansions that are already planned:

  • a new water park at Ocean Park – this is expected in 2018 / 2019 and has an anticipated investment of HK$2.9 billion;
  • a new hotel at Ocean Park in 2017 with an anticipated investment of HK$4.1 billion;
  • Disneyland Phase 1 development expansion, with an anticipated investment of HK$11 billion; and
  • four new Chimelong theme parks in Zhuhai with a total investment of RMB50 billion investment.

Who will benefit?

The demand for all manner of social infrastructure in the Greater Bay Area presents significant opportunity for developers, EPC contractors, operators and maintenance contractors.  However, this infrastructure does not exist in a vacuum and increased development of social infrastructure will have a multiplier effect on other infrastructure needs and will present opportunities to investors in many industries, including:

  • hotel developers and operators to meet increased demand from tourists and convention / exhibition attendees;
  • stadium operators;
  • food and beverage providers;
  • retail developers and operators to take advantage of the increased visitors to the region;
  • tourist service providers; and
  • events management companies.

The increased connectivity and integration of the Greater Bay Area will make it easier for investors, contractors and other goods and services providers active in the region to take advantage of these new opportunities.

[1] Source: MTR Corporation, China Railway, KPMG Analysis

[2] Source: as above

[3] Source: General Administration of Sport of China

[4] Source: People’s Government of Guangdong Province

[5] Source: General Administration of Sport of China, People’s Government of Guangdong Province

[6] Source: HK 2017 Policy Address

[7] Source: International Congress and Convention Association

[8] Source: Legco, Sznews, KPMG Analysis

[9] Source: TEA/AECOM 2016 Global Attractions Attendance Report, Chimelong Group, Disneyland, Ocean Park