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China top tier two city wins planning prize

​​​​​​​11 June 2014

China's top tier two city wins planning prize

Green, modern and charming: why Suzhou is a unique example among China's booming tier two cities


Suzhou, one of China's fastest growing second tier cities, has won a coveted international prize in recognition of its impressive urban planning.

The Lee Kuan Yew World City prize was awarded at the World Cities Summit held in Singapore in early June and honours "effective urban planning that balances the needs of the city's economy, community, heritage and environment".

For China's emerging second, third and even fourth tier cities – urban areas outside of Shanghai, Beijing, Guangzhou and Shenzen – Suzhou is a shining example: "A lot of China's emerging cities could follow the Suzhou model, especially when developing a new CBD," says Joe Zhou, Head of Research for JLL Eastern China.

"Suzhou started developing real estate really early, like many tier two cities: the difference is they have kept the old town and integrated it with the new really well."

"Often these cities develop new CBDs in suburban areas; it's easy to build new towns this way but they become isolated. Suzhou built its new city right next door to the old one, so it's very well connected," he adds.

​​"This unique juxtaposition of old and new in Suzhou was highly commended by the World City Prize panel, which praised its planners for recognising the ‘importance of cultural conservation at the city-wide level’.quot;​

Banking on growth

For businesses and investors, opportunities in China’s up-and-coming cities are key to a successful growth strategy in the People’s Republic.

Sitting on the lower reaches of the Yangtze River, Suzhou established itself as a premier industrial outpost in the 1990s. While its industrial parks used to  attract Fortune 500 companies, including Nike and Adidas, with low manufacturing costs, the new CBD is creating opportunities for higher-value business.

As a result, China's city hierarchy is changing shape, according to JLL. In a recent report, it ranked Suzhou among a new wave of 'tier 1.5' cities – cities that are transitioning to maturity and are riding the wave of massive infrastructure and economic development.

 "Manufacturers are now moving further west where it's cheaper and Suzhou has been able to upgrade its industrial positioning with more high tech manufacturing and business," adds Joe.

Multinational finance companies, such as Standard Chartered, HSBC and JP Morgan, have set up offices in Suzhou's new CBD and this industrial shift is attracting the world's biggest developers and institutional investors.

In 2013, FDI in Suzhou totaled USD8.7 billion and GDP grew 9.8 per cent year-on-year, surpassing the nation's average of 7.7 per cent. While there is likely to be some over supply in the commercial sector in coming years, Joe says Suzhou offers a good long-term investment prospect.

"The infrastructure and the real estate market will benefit from people's wealth, and a growing middle class and high incomes in Suzhou will drive interest," he adds.

Breathing space

With green space and a slower pace of life, Suzhou is enticing businesses with the promise of respite from China's polluted, overpopulated first cities. And tourism is benefiting too.

UNESCO-designated regions such as Pingjiang Historic District have been preserved and the old town and many gardens continue to drive tourism.

"It's also a very attractive city to live in," says Joe. "It's very interesting to see the interaction between the SIP (Suzhou Industrial Park), the SND and the old city's charm. Other Chinese cities could certainly follow the Suzhou model."