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Real estate in Beijing is shaping up to be a strong investment choice, after announcements earlier this year from President Xi Jinping, outlining a plan to combine three cities into one major urban metropolis.
The National Development and Reform Commission in China is currently working on the plan with regional governments in the area in order to grow surrounding provincial areas and integrate the three cities.
The regions of Beijing, Tiajin and Hebei will be combined together to form a massive regional hub with a significantly large resident base. Once the plan has been implemented, there will be an improved level of urban integration into the larger city and economic hub of Beijing.
Hebei, which surrounds the large city of Beijing, covers a total of 187,700 square kilometres and will add many its already large population to the new combined city.
What does this mean for Beijing?
In an April 4 article from the International Business Times, a China Expert Michal Meidan explained to the publication what the implementation of this combined city plan could lead to for Beijing and China as a whole.
"These projects of metropolitan inter-connectivity aim to achieve economies of scale and reduce some of the congestion in the big urban hubs by spreading them out even more," Mr Meidan told the International Business Times.
Another effect of the combination of the three cities into one large region is the potential for improved development in local infrastructure and facilities. As the population will rise significantly, the new metropolis will need the infrastructure such as roads and transport to support residents.
At the same time, population pressures may ease in the large city of Beijing once the plan has been rolled out. This could then shift house price growth into surrounding regions.
China house prices changing
An April 4 article from the Wall Street Journal identified that prices for residential real estate in some areas have already begun to be affected by the announcement of the Hebei integration plan.
The article quoted a resident in Baoding - a suburb of Hebei - as saying that they were searching for a home in the area and it was 4,300 yuan per square metre. According to the Baoding resident, the price jumped significantly to 5,100 yuan per square metre just the next day.
With recent figures from the National Bureau of Statistics of China showing a slowdown in national house prices, some parts of the country may see a different story in the future.
