Mother of pearl

Barely 25 years ago, Tianhe district in eastern Guangzhou was perhaps best known as home to several of the city’s universities. Beyond the suburbs, the district was dominated by rice fields.

Now Tianhe is busy growing businesses rather than crops. The emergence of the Pearl River Delta’s manufacturing might, combined with aggressive infrastructure investment, has transformed northern Tianhe into one of south China’s commercial hotbeds. Tertiary industry – with a particular focus on trading, consumer goods, finance, professional services and high-tech – is thriving.

But Tianhe North is by no means the finished article. A 6.6 square-kilometer patch of land on the district’s southern tip is earmarked to become Guangzhou’s self-styled CBD for the 21st century. It is called the Pearl River New City (PRNC).

“The Pearl River New City will emerge as the new CBD of Guangzhou,” said Alvin Lau, managing director for south China at international real estate consultancy CB Richard Ellis (CBRE). “It will be similar to the emergence of Pudong in Shanghai 10 years ago.”

Big ambitions
At present, this new CBD is distinguished by the 54-floor R&F Center, a grade A office tower built by Hong Kong-listed mainland property developer R&F. Completed last year, R&F Center reflects the commitment of both developers and the local government towards the PRNC project.

Once completed, the area will provide accommodation for 180,000 people and employment for 300,000. Around 70% of the building area of 13 million square meters is designated high-end commercial real estate – tailored for financial institutions and other large corporations from China and overseas.

According to Nigel Smith, CBRE’s executive director for office services in Greater China, there is no shortage of other instances in which a city has created a new CBD.

“Once the existing CBD becomes overpopulated with out-of-date buildings, people and a failing transportation network, companies start to look for alternative locations.”

Floor plate size, specifications, infrastructure and of course cost are the key drivers.  But new buildings in these alternative locations also tend to have better working environments and offer more space flexibility. This is, for example, what drew companies from the City of London out to Canary Wharf.

While Canary Wharf has not surpassed the City as London’s top CBD, Smith does tip the PRNC to become Guangzhou’s preeminent business district. His reasoning – ease of accessibility, environment, availability and image – is very much in tune with the original vision of the PRNC plan.

In addition to the standard zoning, which will see residential and entertainment facilities largely based in the east while office towers and cultural sites are concentrated in the west, the PRNC will be dissected by two main boulevards, Pearl River Avenue East and West.

These boulevards will form the primary axis of the PRNC’s purpose-built transport infrastructure. This includes more than 30 sub-trunk roads, access to two of the city’s nine subway lines (due for completion in 2012) and expressways connecting the area with the airport to facilitate outbound travel.

On the public facilities front, an opera house and a museum are already under construction. They will be joined by a city library, a children’s activity center and plenty of parks.

As a leading Guangzhou real estate player, R&F is looking to make the most  of this large-scale development opportunity. The company currently has a land bank in the area of around 1.2 million square meters, including several plum sites on top of subway interchanges.

“We have international-grade assets such as R&F Center, the Ritz-Carlton and Grand Hyatt hotels as well as serviced apartments managed by the respective groups,” said Adrian Chan, assistant to the chairman of R&F Group.

“Then there is a joint venture between Sun Hung Kai and KWG and ourselves to develop a large commercial complex – close to 500,000 square meters in size – that will include hotels, serviced apartments, office towers and shopping malls.”

Patience pays off
The company is clearly playing a key role in the PRNC but ultimately this is a long-term project that will evolve in stages. Lau of CBRE notes that most business districts begin with high-end residential real estate before the focus shifts to include commercial  buildings as well. As the grading of these properties gets higher and higher, the five-star hotels – such as the PRNC’s soon-to-open Ritz-Carlton and Grand Hyatt – come in. Finally, there are more retail and entertaining facilities.

This final piece of the jigsaw, the service industry infrastructure of scalable shopping malls, restaurants, coffee shops and so on, only comes when there is a critical mass of people. Right now, it is an area where the PRNC is visibly lacking, partly because it is some distance from existing facilities and so everything must be built from scratch.

Nevertheless, Smith believes that patience will pay off for both Guangzhou and R&F.

“If you look at that master plan and its vision it takes a brave developer to puts its stamp of approval on it,” he said. “But when you look at the PRNC skyline and see numerous buildings with R&F logos on them, you know that you are in good hands.”