The Guangdong-Hong Kong-Macao Greater Bay Area construction and real estate sector is at a crossroads. With a year-on-year decline of 2.9 percent — the only one among six studied key industries to post negative growth in the GBA Industry Development Index 2024, jointly released by Our Hong Kong Foundation and Dah Sing Bank — the sector is grappling with challenges. Nonetheless, the index underscores the importance of targeted measures to accelerate green and property technology adoption, driving new growth momentum.

Last year witnessed significant regulatory easing across the Greater Bay Area housing market. In February, Hong Kong abolished its longstanding demand-side management measures. On the Chinese mainland, most cities, including Guangzhou, implemented major rounds of policy relaxations in May, September and October, lifting virtually all property market restrictions. Shenzhen remains an outlier; despite some policy adjustments, the city continues to enforce purchase restrictions and mandates a higher down payment ratio of 20 percent for second homes, maintaining a more cautious approach.

The policy adjustments implemented in 2024 were a great boost to market confidence, with news reports indicating significant increases in Hong Kong’s primary and secondary property transaction volumes and values compared to 2023.

Even Shenzhen, despite its stricter rules, posted a 35-month high in residential sales in October. Yet, this apparent revival warrants cautious optimism. The real question remains: Can this growth endure, and what factors can inject new momentum into the sector?

To achieve sustainable growth, the focus must shift from short-term stabilization to a comprehensive long-term development strategy. While the property market will undeniably continue to rely on macro factors such as population size, economic performance and interest rates, its future growth and resilience will increasingly hinge on harnessing the vast opportunities offered by green initiatives and information and technology (I&T) innovations.

Being green and sustainable is no longer an optional add-on; it is a strategic imperative that corporates can no longer afford to ignore. The global shift toward higher ESG (environmental, social and governance) awareness has created a golden opportunity: Corporates which embrace eco-friendly practices can secure green financing and win over increasingly conscious consumers.

Consider Prologis in the United States, which has expanded its portfolio of LEED-certified projects to 416 in just four years. This commitment to sustainability has unlocked diverse financing options, including lower interest rates and reduced mortgage insurance premiums, proving that green practices are ethical as well as profitable.

It’s not only industry giants leading the way — smaller innovators are making a significant impact as well. In Hong Kong, Ecobricks has highlighted the potential of green materials by converting plastic waste into durable building products. Through its partnership with Sino Land at Gold Coast Piazza, it has successfully recycled 5,400 kilograms of plastic waste. This isn’t only a green initiative; it’s an example of the circular economy that Hong Kong urgently needs to embrace.

However, regulatory hurdles persist. Current building laws in Hong Kong prohibit the use of certain sustainable materials — such as engineered timber — citing fire safety concerns. While some of these restrictions are necessary to safeguard people’s lives, they inevitably limit developers’ ability to adopt eco-friendly alternatives to carbon-intensive materials like steel and concrete.

To unlock the full potential of green building materials in Hong Kong, policy adjustments are crucial. Regularly reviewing and updating building codes is vital to fostering the development and broader adoption of sustainable materials that address both embodied and operational carbon, aligning with evolving environmental concerns and technological advancements.

To promote green materials and building design, Hong Kong can extend the successful GFA (gross floor area) concessions model to high-energy-use buildings like data centers. New data centers adopting green designs could receive certain GFA concessions, while existing ones implementing energy-efficient practices, such as liquid immersion cooling, could be supported through financial incentives such as tax breaks.

By embracing green technologies and property technology solutions, stakeholders can stabilize the market while driving innovation — ensuring the sector’s relevance and resilience in an ever-evolving economic landscape

While sustainability initiatives focus on green materials and energy efficiency, proptech addresses a different but equally underdeveloped aspect of real estate — enhancing management and urban living experiences in the Greater Bay Area. In the United Kingdom, platforms like SpareRoom improve property rentals and flat-sharing by enabling users to highlight preferences and search for rooms or flatmates based on specific criteria.

In the Greater Bay Area, residents often rely on platforms like Xiaohongshu and Facebook when looking for flatmates, which are not tailored for efficient property rentals. Developing regulated apps or enhancing existing platforms with dedicated functionalities could build trust and streamline the process, boosting efficiency in the region’s rental market.

Proptech extends beyond mobile applications, representing a transformative shift in real estate management and the construction process. For instance, digital twin technology creates virtual replicas of buildings, enabling real-time monitoring and predictive maintenance. In Singapore, this innovation is already improving energy efficiency and cutting operational costs. Similarly, wearable devices and internet of things sensors enhance construction site safety by tracking worker movements and detecting potential hazards. These technologies, still underutilized in the Greater Bay Area, should be developed further to support long-term growth in the sector.

Recent regulatory adjustments signal a commitment to revitalizing the Greater Bay Area’s construction and real estate sector. However, these efforts must be paired with strategic foresight to sustain growth. By embracing green technologies and property technology solutions, stakeholders can stabilize the market while driving innovation — ensuring the sector’s relevance and resilience in an ever-evolving economic landscape.

Kenny Shui is vice-president cum co-head of research; Pascal Siu is senior researcher; and Katie Ho is an assistant researcher at Our Hong Kong Foundation.

The views do not necessarily reflect those of China Daily.