A researcher for U.S. real estate firm Cushman & Wakefield’s Shenzhen branch, Greg Isaacson, visited Shenzhen’s Qianhai development zone last week and offered his view on the development there.
“There is a lot of excitement about Qianhai,” said Isaacson. “The perception is that the Central Government is serious about pursuing further experiments with financial reforms: capital account liberalization, yuan convertibility and so on. I think there is definitely a serious drive to extend these policies.”
Isaacson said Qianhai has a lot of potential, but he saw similar initial excitement about the Shanghai free trade zone, followed by frustration caused in part by a lack of clarity.
“In general terms it looks promising, but when you get down to the implementation of specific regulations, there is some ambiguity,” said Isaacson. “Companies are waiting for further clarification on how exactly they will be allowed to operate in Qianhai. But this hasn’t stopped over 11,000 companies, including hundreds of foreign firms, from registering in the zone.”
He recognized China’s intention to reform its financial sector, but he cautioned that many questions need to be answered before Qianhai becomes successful.
“There is a question about how Qianhai will interact with other free trade zones in China,” said Isaacson. “What advantages can Qianhai offer that the others won’t? Why locate or invest in Qianhai and not the other zones? There is a potential for competition between Qianhai and the Shanghai FTZ, for example, and with other actual or proposed new zones throughout China.”
Isaacson also raised a question about currency controls. “If currency controls are loosened in Qianhai that could have a profound effect on the rest of China, too. Will the government ring-fence, or seal off Qianhai from the rest of China?” he asked. “So there are a lot of unresolved questions about the implications of these policies.”
Before joining Cushman & Wakefield, Isaacson worked as a journalist and didn’t expect to work in the real estate sector. “It was very serendipitous,” he said. “My mother used to work in real estate, but I never had a specific interest in this industry until recently.”
Isaacson feels real estate is very interesting in China because it is connected to so much else. “About 40 industries are directly affected by the real estate sector in China, and over two-thirds of China’s household wealth is in real estate, much higher than in the United States, for example.” he said. “For me this is not just about property, it’s a chance to explore economic issues and policy issues in China. It’s fascinating to research these topics, in particular at Cushman & Wakefield, where I have access to great resources and amazing colleagues who are extremely knowledgeable.”