7+1 – The big plan for Pudong

21 September, 2010

  • With an investment of RMB100 billion over the next three years, the 7+1 plan will oversee the development of seven key areas in Shanghai’s Pudong New Area, with the +1 zone being the Pudong side of the Expo site. The plan will look to add momentum to the development of finance, industrial and modern services in Pudong
  • The plan will turn Pudong into an even larger multifaceted economy and add weight to Shanghai’s overall ambition to become an international financial and shipping centre by 2020
  • Puxi is not expected to lose out as a result of Pudong’s evolvement but a symbiotic relationship will continue to exist between the two areas in terms of the industrial, office, retail, residential and hotel property markets
  • The plan will become a showcase for other major economic areas and cities in China on how sound organisational structure leads to greater economic output

Pudong has witnessed a massive amount of investment and development over the past 20 years. The 7+1 plan recently announced by the Pudong district government will maintain the impetus and lay the groundwork for the development of both Pudong’s and Shanghai’s economy well into the 21st century, said DTZ in its China Insight Research, published today.

DTZ Research provides insights into what the 7+1 plan means generally for Pudong, for Shanghai and for China by analysing how the plan will influence the individual property markets in the eight affected zones in Pudong; namely the Shanghai Comprehensive Free Trade Zone, the Lingang Industrial Zone, the Lujiazui Financial and Trade Zone, Zhangjiang High-Tech Park, the Jinqiao Export Processing Zone, the Lingang Town Central Zone, the International Tourist Zone (Shanghai Disneyland) and the Post Expo Zone.

The plan will facilitate the entrance of industries linked with finance, commerce, exhibition and modern services into the highly populated area along the Huangpu River, while the less populated area along the East China Sea will accommodate shipping, trade, logistics, heavy equipment manufacturing, advanced manufacturing, aviation and tourism industries.

A focus of the 7+1 plan is the expansion of the Lujiazui area which will add momentum for the area to become the pre-eminent office market, not just for Shanghai, but also for mainland China. In a bid to accommodate the ongoing development of the financial industry there, the Lujiazui Financial and Trade Zone will expand to 31.78 sq km with 1.35 million sq m of grade A office space to complete by 2014. By this time, Lujiazui is expected to house around 35% of the city’s total stock.

David Green-Morgan, Head of DTZ Asia Pacific Research, said, “As China’s financial market continues to grow, we expect both multinational and domestic financial institutions to continue ramping up their operations in China with the Lujiazui office market being their top location choice. The expansion of Lujiazui will not necessarily have a negative impact on the Puxi office market as both localities largely house different types of businesses. Lujiazui has and will continue to attract companies related to the financial industry due to policy and incentive driven agglomeration. Puxi, alternatively, remains generally alluring for service providers and for the HQ operations of many MNCs due to good connectivity and excellent amenities.”

For the International Tourist Resort Zone, the key driver will be the planned Disneyland theme park, supported by both the coastal Sanjiagang tourist resort and Lingang holiday resort. Since the announcement of Disney coming to Pudong, house prices in the nearby Chuansha area have increased by over 30%. David Ji, DTZ’s Head of Research, Greater China, said, “The more value added services being established in the area should drive up residential demand and prices.”

“Better City, Better Life” is the theme of the 2010 World Expo and will continue to be realised in the development of the Post Expo Zone. Spanning 3.93 sq km, the zone now includes the Expo venue, some green space for public use and a residential community. Under the 7+1 plan, the zone will be mainly used for the development of the financial, exhibition, commercial and modern service industries.

Shaun Brodie, DTZ’s Head of East China Research, commented that although the exact use of the zone is still under discussion, any future real estate development in the zone, especially on the commercial side, will complement other business hubs, such as Lujiazui. “Being close to Shanghai’s downtown area and now enjoying good transportation links, any future property to be built in the Post Expo Zone, be it office, retail or residential, is expected to see both rental and price growth in the long-term,” he said.

The expansion of the Pudong area is expected to encourage demand for occupied space across the office, retail, residential and industrial sectors, and in turn upwardly lift both rentals and prices for these property sectors in Pudong. “Finally, upon successful execution, the 7+1 plan has the potential to become an important reference point for other key economic zones and cities around the country in how to best plan and implement structural reorganisation in order to drive improved business efficiency and, in turn, greater economic productivity,” concluded Shaun Brodie.

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