This Chinese city wants to make housing more affordable, but…

…not everyone can afford Shenzhen’s new ‘affordable’ homes.

Bogang Village looking north towards the city of Dongguan, Bao’an District, Shenzhen [Michael Standaert/Al Jazeera]
Bogang Village looking north towards the city of Dongguan, Bao’an District, Shenzhen [Michael Standaert/Al Jazeera]

Shenzhen, China – With no social insurance, no legal residence permit, and a quarter of his monthly family income going towards renting a cramped apartment in an illegally constructed building on the outskirts of the city, Shenzhen is no socialist paradise for Chen Zhengyu.

Chen, 29, works at a factory assembling printed circuit boards. His wife helps with an online business making t-shirts at an office nearby. Together, they earn 4,000 yuan ($571) a month. His mother has moved in with them from their hometown in Guangxi, about 600 kilometres (373 miles) to the west, to help care for their one-year-old daughter.

The millions of migrants in Shenzhen working as taxi and express delivery drivers, as cleaners, in restaurants or other low-pay service industry jobs, share a similar story.

Rising housing costs and living expenses are pushing them further from the city centre and into longer commutes to their low-paying jobs.

Similar circumstances across the border, in the semi-autonomous city of Hong Kong, are a factor that has led to widespread protests against the government for months.

But on the mainland, where widening inequality has also become a growing source of concern for the government, authorities have been implementing schemes, well before the recent unrest in Hong Kong, to ensure that housing does not become a source of social instability.

Those reforms, however, may yet fall short of being of any practical help for the likes of Chen and the millions of other low-paid people struggling to keep a roof over their heads.

In August, the government declared Shenzhen a pilot zone for what Beijing describes as “socialism with Chinese characteristics”. The city was upgraded as the most important city in the Greater Bay Area, which also includes Guangzhou, Macau and Hong Kong.

Shenzhen has recently fleshed out a plan, first announced in 2018, to build more than 1.7 million units of affordable housing by 2035. It is part of the city’s first housing reforms since 1988 when it launched land auctions to private companies, leading to one of the biggest global real estate booms in history as the city transformed from a series of villages with approximately 300,000 inhabitants to the current megacity of 22 million.

Daily life on the Chinese side of the China-Hong Kong border, near the Humming Gardens, in Shenzhen [File: Qilai Shen/Bloomberg]

Trouble is, those new units will only be available to qualified “professional talents” – migrants with advanced degrees that the city wants to attract to its universities and major technology companies like Huawei, Tencent, ZTE and DJI – and holders of legal residence permits, or hukou, for Shenzhen.

Guo Jianbo, chairman of the Shenzhen Inland Real Estate company, told Al Jazeera the government is under pressure to come up with new policies to address housing issues in Shenzhen.

“Nearly 70 percent of the people currently in Shenzhen are non-hukou residents,” Guo said in an interview at his Shenzhen office. “Given that the city’s population is around 22 million, it’s practically impossible at the moment for the Shenzhen government to address that [housing problem for low-income residents] because one must have a Shenzhen hukou in order to be qualified for the affordable houses.”

‘Affordable’ for professionals only

The government’s plans include redeveloping ‘urban villages’, or older parts of Shenzhen currently supplying cheap rental housing. Some 30 percent of new housing units in redeveloped urban villages will be turned into “affordable” housing under the plans – affordable, that is, for the professionals the government is trying to attract.

Shenzhen’s average price per square metre (10.8 sq feet) for new housing in October stood at around 62,000 yuan ($8,850), according to Julive, an online and mobile property consultancy service. That puts the cost of a newly built 120sq metre (1292sq-foot) apartment comfortable enough for a family of four at slightly more than $1m.

That is still affordable compared to Hong Kong next door where average prices per square metre are approximately $28,000, double that of Singapore.

But since the average annual salary in Shenzhen in 2018 was 63,635 yuan ($9,082), according to the Shenzhen Bureau of Statistics, a $1m-dollar home is far out of reach for most families, even if both spouses are employed.

The urban village of Gangxia in Shenzhen, where the ‘handshake’ buildings became ‘kissing’ buildings [Michael Standaert/Al Jazeera]

Just a decade ago, average house prices stood at 14,858 yuan ($2,120) per square metre, according to state media, but average wages were also lower at $6,669. 

As for the affordable housing policies, caps will range between 20,000 yuan per square metre to 50,000 in more central areas, still not cheap for a young professional but possibly within reach of those attracted to the city with sizable subsidy packages.

For workers like Chen, however, the climb upward is particularly bleak.

“I don’t have any plans for the future,” he said. “I don’t see myself living in those houses in the future, and it is not something for me without a college degree.”

The Housing and Construction Bureau of Shenzhen Municipality did not comment on questions about the talent housing program and the lack of policies for low-income residents after several requests.

Illegal buildings

One of the new developments at Baishizhou in the hi-tech zone of the Nanshan district led to the eviction of some 150,000 residents over a two-month period earlier this year, according to state-run media.

Most remaining urban villages are at least fully or partly in the path of these redevelopment plans, which means low-cost rental housing will be squeezed even further.

Since most of the buildings constructed in urban villages do not have property certificates – Guo of the Shenzhen Inland Real Estate company estimates that only 1.7 million residential units had such certificates at the end of last year – they are technically illegal buildings.

While these “small property” holdings are illegal, they have developed something of a de-facto legal status over time that allows Shenzhen hukou holders from those villages who are part of the local collective to claim compensation when they are knocked down.

There’s an old joke in Shenzhen, says Qiao Shitong, an expert on property and urban law at the University of Hong Kong, that the best way to get rich in Shenzhen is to marry one of those hukou-holding villagers because of the rental income they reap and the eventual compensation they claim once the government knocks down their buildings.

Qiao, who published a book on small property holdings in Shenzhen, says these illegal properties are fundamentally important to the functioning of the city as a space for low-income housing.

Villagers end up getting handsome compensation even for buildings that are illegal, Qiao says, because of the government’s urge to develop the city at all costs.

A view of apartment buildings in the Futian district in Shenzhen, China [File: Qilai Shen/Bloomberg]

“A city without someone like me can totally function,” Qiao told Al Jazeera in an interview at the campus. “But without the delivery guys, cleaning ladies, taxi drivers, it doesn’t work.”

The success of Shenzhen, he says, is that millions of migrant workers have come to the city and settled, mainly in those urban villages, contributing to the economy by providing a supply of cheap labour.

“If you rebuild all these villages and push people out in favour of talents, in the long run, that might undermine the city’s development,” Qiao said.

Longer-term impacts could include housing shortages, both for the lower end of the labour market, as well as fresh graduates without Shenzhen residency status who often start out renting in urban villages.

“With these new projects being built and urban villages being renovated, the situation is likely to become even more difficult [for those renters],” said Guo, who has been involved in the Shenzhen property market for 27 years.

Guo says this will further put further pressure on companies that find it too costly to hire employees that do not meet the talent attraction requirements but are necessary for the functioning of a company like clerks, secretaries, and IT support staff.

“The talent housing policy seems to me very dubious,” Qiao said. “If you are a talent, a person with a college degree or high achievement, if you go to Shenzhen you can get talent housing and a lot of subsidies, but that’s not really a person who needs it.”

Source: Al Jazeera

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