Shanghai Free Trade Zone to Lead to More Residential Development?

In a bid to boost the country's economy, the Chinese government launched the brand new Shanghai Free Trade Zone - an initiative located in the centre of the Pudong district - at the beginning of this month (October 1).

The zone is one of the many economic reforms recently announced by the government, in order to create more sustainable growth over the long term.

According to a statement from the People's Republic of China Minister for Commerce Gao Hucheng, the implementation of the free trade zone is part of "a more active strategy of opening up under the new circumstances of reform and opening to follow the new global trend of trade and economic development".

Currently, the free trade zone covers 29 square kilometres of land over four areas and allows both Chinese and foreign companies to obtain a licence and operate in the designated precinct.

Most of the trade that will occur in the Shanghai Zone will be in the financial sector.

In an October 28 Forbes article, Colliers International Associate Director for Industrial Investment Peter Garrison commented the Shanghai Free Trade Zone will create a brand new financial hub for Shanghai.

"I would image that a banking cluster (will form) like you now have in Lujiazui - something similar though obviously on a smaller scale," said Mr Garrison in the Forbes interview article.

"There will be more foreign financial services companies. The Chinese banks will become ever bigger. That will have a direct shoot-off effect for more retail and higher end residential."

As new businesses will be set up in the free trade zone, it offers a number of investment opportunities for residential development in the area, as more people will want to live closer to their place of employment.

In an October 6 article on WantChinaTimes.com, Li Xiao, an official at the China Real Estate Chamber of Commerce, stated the free trade zone will also open up doors for developers in the area. In turn, this could result in increased residential housing supply in the zone.

"Land property related to the zone has become the focus of developers and investment institutions. We can say that the free trade zone has had a major and far-reaching impact on Pudong and Shanghai, although the property market is overheating and has the risk of over-speculation," he told WantChinaTimes.com in an interview.

For more information about property in and near the Shanghai Free Trade Zone, get in touch with Ray White Group at www.raywhite.com.