Panyu aims for central role in Guangdong

5 May 2011

By Thomas M. H. Chan

Every great city is supported by satellite districts. For the great metropolis of Guangzhou, its most important satellite is Panyu, south of the city centre.

The evolution of this former remote area into a bustling urban area is testament to Guangzhou’s ambitious infrastructure investment.

Since 2000, Guangzhou has been planned along a north-south axis. Away from the congested old city centre, new urban infrastructural facilities have been focused on areas south of the Pearl River, first into the Henan area, the former southern suburb, and further into Panyu, which was converted from an independent city into an urban district of Guangzhou in 2000.

Some major infrastructure projects have been located in Panyu – for example, the new university town and a proposed new Guangzhou city centre.

Strategically more importantly, the nexus of inter-provincial high speed railways and one of the four largest terminals of the national railway system, the new South Station of Guangzhou, is also in Panyu. Most passenger lines – city subways and intercity express railways number over 10 – of the regional railway network of the Pearl River Delta region will go through the Southern Station and Panyu.

Looking at planning maps of Guangzhou and the Pearl River Delta region, you find Panyu at the centre of the regional system, not just geographically but also in terms of the massive flows of people that will be re-directed by the coming mass transit system.

But will Panyu become the new centre of the expanded Guangzhou and the emerging PRD metropolis?

Real estate boom and rising prices

It is true that Panyu has become the focus of urbanisation in the PRD region, with Guangzhou residents moving on a massive scale to escape congested city life and escalating housing costs in the eight districts of the old city centre. At least the northern part of Panyu, just across the river from Henan area in the old Guangzhou, has become much more accessible through construction of new bridges and highways and the coming railway networks.

A look at construction and sales statistics in Panyu in recent years shows clearly the popularity of the place for residents of the region. Both Yuexiu and Tianhe districts, which have performed better than Panyu in private housing development, are the old and new central business districts of Guangzhou. They are also the most developed districts in the city, with GDP in 2009 about double of that of Panyu. It is already very impressive for Panyu to narrow the gap with these two well-established CBDs over the last few years.

In the four years from 2006 to 2009, Panyu sold 8.4 million square metres of housing, which can accommodate about 100,000 households, for 62 billion yuan. In 2009, another five million-plus square metres of private housing were under construction. For a district that has less than one million registered local residents, not including recent new arrivals, these are impressive figures and suggest most of the buyers are non-locals and come from the old city centre of Guangzhou.

Rising housing prices in Panyu also confirm the popularity of the district; in 2009, the average purchase price in Panyu was 8,980 yuan per square metre, very close to the average of the 10 urban districts of the city, excluding the two suburban counties, of 10,415 yuan for the year. In comparing the housing prices of Panyu and the old city centre, one should bear in mind the disincentive of the 17-kilometre distance between Shiqiao, the capital town of Panyu, and the city’s CBDs.

Public services lag behind

However, urbanisation in terms of increases in resident population and housing prices does not tell us anything about the quality of city life in Panyu. Public facilities, like hospitals, schools, public amenities, government offices and other urban functions provided by government and non-government organisations, are normally concentrated in old city districts, as it takes decades to build up both the scale and the quality of services.

Retail establishments and business offices, which bring service employments and purchasing power, also tend to cluster in the CBDs to take advantage of the concentration of public services and clustering economies.

As a new city district, Panyu needs heavy investment to increase its level of public services, which have lagged behind those of the old city districts as well as to cater for the residents moving from Guangzhou, who are used to and thus have a higher demand for better public services.

Enclaves, not part of city network

There are several problems for the evolution of Panyu if it is to become the urban centre of the emerging PRD metropolis.

First, there is still a great difference between the northern part of Panyu, north of the Shawan waterway, and the old city districts, in terms of public services, both quantitatively and qualitatively. The Panyu government and society have focused too much on real estate. Although the tertiary sector of the local economy has expanded rapidly and replaced industry as the main driver of the economy – the contribution of the tertiary sector to local GDP passed 50% for the first time in 2008 – investment and output in the real estate sector have dominated the tertiary sector.

The consequence: the more housing units are built, sold and occupied, the greater the demand for urban services provided by the government and the greater the gap in the demand and supply in public services, as the government lacks the capital and time to improve them. As a result, people who have recently relocated from Guangzhou still find their employment, schooling and most public services and retail needs in their original residential places in the old city centre.

The new residential communities in Panyu have become enclaves, with little linkages and economic contribution to the local society. They are commuter communities which put a heavy stress on transport links between Panyu and the older city of Guangzhou. The enclave nature of these new communities of several hundred thousands of people in a district of less than a million population prevents an organic growth of local services, public and private, and convert a local economy that was originally self-sufficient into one that increasingly depends on the service economy of Guangzhou.

Table 1: Economic performance of Panyu, 2007-2009

GDP

Value (billion yuan)

y-o-y growth

Share of city total

Guangzhou city y-o-y growth

2007

62.89 (5)*

13.0%

8.8%

14.9%

2008

72.76 (5)

13.1%

8.9%

12.3%

2009

86.38 (4)

12.3%

9.5%

11.5%

Retail sales

2007

33.23 (4)

23.0%

12.8%

18.9%

2008

41.55 (3)

25.1%

13.2%

21.0%

2009

49.23 (3)

18.5%

13.5%

16.2%

*ranking among 10 districts and 2 counties of Guangzhou.
Source: Statistics Bureau of the Guangzhou Municipal Government.

Table 2: Value and space of commercial housing sold in Panyu, 2007-2009

Contracted value

Value (billion yuan)

y-o-y growth

Share of city total

Guangzhou city y-o-y growth

2007

177.37(3)*

36.3%

15.1%

36.09%

2008

129.59 (3)

-26.9%

13.9%

-20.2%

2009

183.03 (3)

41.2%

14.2%

37.5%

Total space in 10,000 square meters

2007

244.48 (2)

0.1%

18.1%

2.6%

2008

150.90 (3)

-38.9%

14.7%

-24.2%

2009

203.83 (3)

35.1%

14.8%

34.2%

*ranking among 10 districts and 2 counties of Guangzhou.
Source: Statistics Bureau of the Guangzhou Municipal Government.

Fears of housing bubble

Second, the boom of private housing in Panyu has a less solid foundation than that of the older city districts. When the speculative bubble bursts, the better and greater public services of the older city districts will show their great competitive advantage against those of Panyu, when demand shrinks. Already in 2008, sales of housing in Panyu dropped by a larger margin than the city average; but the adjustment was minor and incomplete.

With the coming conversion of the Asian Games villages in Panyu into private housing for sale after the game, the balance of supply and demand will tilt. The Asian Games villages have 8,000 residential units of 1.06 million square metres and will be put onto the market after the Games at the end of this year. The project has another 3.2 million square metres for construction of private housing.

Altogether this will be equivalent to more than two boom years of sales. The impact on the local housing market will be detrimental, although there will be a brighter side – lower housing prices for the buyers.

Do not overstretch

Third, the Guangzhou and Panyu governments aim to develop the district into ‘a modernised new city district of Guangzhou, a base of producers’ services and advanced equipment manufacturing industries of the PRD region, an ecologically-friendly urban residential area of leisure and tourism in Guangdong and an important centre of science, education and information for southern China.’ This will be a strategically long-term goal of the district.

In the shorter term, however, it may not be easy to reconcile competition for space, human resources and investment funding among all these sectors, industry and related services, real estate and education and science. As an organic and sustainable city or city district, Panyu needs to integrate them together and not allow each to evolve into enclaves. There may also be unresolved problems in putting together urban consumer services and manufacturing industry and its related producers’ services. What will be the development priority in Panyu? Urban services or manufacturing industries?

Panyu’s trump card – Guangzhou South Station

Notwithstanding these problems, Panyu has one advantage against which other districts and cities in the PRD region cannot compete: the location of one of the busiest railway terminals in China and the world, which operates on many levels. It serves national, regional and local transport needs – and probably international as well, if the high-speed railways are integrated with airports in the region.

The Guangzhou South Station will have several hundreds of thousands of passengers going through it every day, creating not just opportunities for retail sales and services, but huge economies of agglomeration, scale, scope and network that are conducive to innovation and high productivity.

If the Panyu government understands the great economic potential of the station and plans and develops accordingly, the ‘station economy’ so created will be able to make the district or at least the areas adjacent to the station a new modern city centre of Guangzhou. A good comparison or role model is the world-famous Shinjuku ‘station economy’ of Tokyo.

MACAUHUB FRENCH