Why China’s youngest city is looking for new space

Shenzhen’s continued expansion is spurring companies to push out beyond the main business district

January 25, 2021

This year Chinese city Shenzhen put in place a policy that will oblige companies to let staff take their mandated leave even if they applied to work overtime voluntarily.

The ruling is seen as essential to help prevent the workforce – mostly young people – from burning out, thereby keeping the city an attractive one to work in.

As one of China’s tech hubs, the city is famed in the country for its hardworking culture and long work days. Shenzhen is also China’s youngest city, with the average age of its permanent population 32.5-years old, compared to the country’s 37-years-old average, according to official statistics.

This workforce has helped catapult the city from backwater fishing village to shining metropolis. In 1995, Shenzhen has an estimated population of 2.39 million. Today, the city has an official population of 13 million, although many put the figure closer to 20 million.

The city’s gross domestic product in 2019 is about US$400 billion, the third highest in China.

Young people from all over the country flock to the city for opportunities in its finance and technology-related sectors, which accounted for around 35% of the total working population in 2019, according to Statistics Bureau of Shenzhen Municipality and JLL’s estimation.

“Shenzhen is dubbed the City of Dreams in China,” says Silvia Zeng, Head of Research, JLL South China. “The city attracts hundred of thousands of young people and talent to work. It’s one of the most dynamic cities in terms of population and this is fuelling the growth of industries and companies.”

Office expansion

The pace of growth and steady stream of people migrating to Shenzhen have put pressure on its mature business districts. To keep expanding, companies are leasing office space in other, newer business districts, like Qianhai and Sungang.

“Currently, most of the offices are concentrated in Shenzhen’s inner ring area like the Futian CBD,” says Zeng. “Only 21.8 percent of the Grade-A office stock is located in decentralised areas, but as offices and employment continue to grow, we expect this to reach around 40 percent by 2024.”

Chinese smartphone maker Oppo expanded into a 100,000-square-meter building in Qianhai in the second half of last year. A MNC financial consulting firm also took large space in Nanshan’s One Excellence Qianhai, where rents are reported to be up to 30 percent cheaper than in Futian.

“Cost-saving is not the only motivation. The technology, media, and telecom sector, and financial giants, are looking beyond the inner ring area for large parcels of land where they can build their campuses or headquarters,” says Zeng.

The liveability trade-off 

Shenzhen’s attractiveness to young people goes beyond jobs.

“Shenzhen has been a pioneer in terms of urban planning and innovation which is appealing to young people,” says Zeng. “For instance, it’s the first Chinese city with full 5G coverage and an entirely electric bus fleet – there is a certain sense of pride among young people to be seen living in Shenzhen.”

But that liveability is coming under strain. It has been reported that the city lacks schools and apartments to accommodate the growing population. Rising home prices are another hurdle.

“Shenzhen’s government has launched some policies to address the issue, such as building more schools, increasing enrolment and introducing Shenzhen Campus of prestigious universities,” says Zeng. “to prevent speculation in the residential market, the government adds residency and tax requirements as preconditions for purchase, and lottery draw is utilised to decide potential buyers’ purchase eligibility for projects with excess demand.”

Looking for more insights? Never miss an update.

The latest news, insights and opportunities from global commercial real estate markets straight to your inbox.