Industry Update
Opinion Article16 September 2016

Advanced Industry: The Driving Force Creating New Hotel Markets In China’s High-tech Zones

By Daniel J. Voellm, Managing Partner HVS Hong Kong

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High-tech development zones, areas representing the cutting edge of the high-tech industry, have been a driver of the economy and a window to the outside world for many cities in mainland China. Since 1991, the State Council has approved 105 national High-tech Zones in total, most of which cater to the heavy industries. However, with the continual development of China and the appearance of China's current 'L' economy, these High-tech Zones begin a transformation process and seed new industrial clusters, with an increasing share of producer service and financial services. For example, in the Bejing Zhongguancun Science Parkthe added value of the producer service industry in 2015 was doublethat in 2005, accounting for almost 50% of GDP in Beijing Zhongguancun Science Park. Producer services normally includes financial services, information services, technology services, commercial services and distribution services.

Meanwhile, the rise of these High-tech Zones attracts massive investments from real estate developers driving investment in office, retail, residential and hotel assets, providing essential complementary uses with supporting facilities and amenities to the High-tech Zone. The study of hotel development in the urban fringe of High-tech Zones provides clues as to which factors will have a direct impact on the hotel's location, grade and classification in the different stages of the High-tech Zone. Therefore, we selected six representative High-tech Zones from domestic tier-1 and tier-2 cities, which include Beijing, Shanghai, Shenzhen, Xi'an, Chengdu and Wuhan. The study focuses on the development of industrial clusters and the different derived real estate types in these six High-tech Zones as well as the ratio of each hotel type in terms of guest rooms. The article reveals prevalent trends in these regional hotel markets and gives recommendations to parties interested in investing in High-tech Zones. Sources of the article are from the official website and annual report of each High-tech Zone, CNTA and HVS research.

Daniel J. Voellm

Daniel Voellm, MRICS has provided advice in many markets across Asia Pacific. Prior to heading the Hong Kong office, Daniel Voellm was Vice President at HVS’ global headquarters in New York conducting a wide range of appraisals, market studies and underwriting due diligence services in 22 states as well as Canada.

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    Managing Partner - HVS Asia-Pacific
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