In Shenzhen, a Metropolis Born of China’s Economic Prosperity
Paibang Village is a reminder of the city’s modest past and the challenges ahead for reviving the country’s property sector. It is an urban village, a labyrinth of low-slung apartment buildings and mom-and-pop storefronts connected by a maze of alleyways and narrow roads. There are hundreds of them in Shenzhen, a municipality of 18 million people next to Hong Kong, and thousands of such villages across China.
Now with China mired in an unyielding property crisis, policymakers want to revamp aging urban neighborhoods like Paibang to kick-start construction and spur local economies. Seven years ago, Paibang was chosen for an “urban renewal” by city officials, but the project has faced difficulties due to financial issues faced by China Evergrande, one of the country’s biggest real estate firms. The construction in Paibang remains at a standstill as a glass-enclosed modern building that serves as the project headquarters was largely empty on a recent weekday.
China’s biggest homebuilders are in financial turmoil, suffering a sales slowdown and restrictions on borrowing after years of excess, which is weighing on the economy. In response, Chinese leaders are looking at urban villages, community-owned enclaves within larger cities. This transformation of urban villages has been identified as an “important measure” to “expand domestic demand.”
Redeveloping urban villages is more complicated and could be just as costly, with local governments taking years to negotiate agreements from cooperatives that own land as well as individual building owners. Projects in Guangzhou, China’s third-biggest city, are taking longer than expected to complete.