Real Estate
China's 5G Data Edge Bodes Well For Real Estate - Schroders

The private bank and investment house argues that a surge in data capability in Chinese cities will boost their real estate prospects.
China is the best placed of any major country in the world to
cash in on fifth-generation cellular communications technology,
boosting the country’s cities and positive for real estate firms
investing in them, according to Schroders.
The 5G rollout in China is likely to prompt major investment in a
dense network of miniature cell phone towers. Such small cells
function over short distances, making them most practical in
highly populated cities, adding to the argument that a
data-hungry knowledge economy will only thrive in certain cities,
fuelling their economic growth and strength. 5G will also enable
new technologies such as the “Internet of Things” (the network of
every physical thing connected to the internet), practical for
the first time, boosting data creation.
“China is at the forefront of a technological revolution and the
quantity of data it will yield is unprecedented. For investors in
companies based in the country’s global cities, this could bring
compelling opportunities,” Hugo Machin, co-head of global real
estate securities, and Ben Forster, equity analyst, global real
estate, said in a note.
“Our view is that the knowledge economy (which relies more on
intellectual capital rather than physical inputs) is focused on
fewer, more important, global cities. Demand for land increases
as economic activity strengthens, which means that owners of real
assets have pricing power. This is even more evident in China
than in other parts of the world, as we saw on a recent visit to
two meta-city regions – Beijing and Shanghai,” they
said.
Companies that own or operate data centres and network
infrastructure (macro towers, small cells, fibre) will see
increasingly strong demand and will make their cities more
productive, they continued.
“Consumption through handheld devices is higher in China than
anywhere else in the world. Chinese consumers were quick to adopt
the internet, which led to the rise of online retailers and the
subsequent introduction of mobile payment facilities. This means
that Chinese consumers are used to purchasing and paying online,
and new software allowing them to control other areas of their
lives could be adopted equally quickly,” they said.
China has an edge on 5G over other countries they said.
“5G represents a critical growth point. Companies that own
network infrastructure and data centres will benefit from
widespread mobile usage of the Chinese consumers and future
adoption of the Internet of Things. We think that there is an
inflection point coming in how people control their lives through
their devices. We think 5G is the catalyst and 5G can only
operate over short distances in dense locations, so it needs
Global Cities. We think this makes Global Cities even more
important to the world economy, underpinning the value of land in
specific locations. For investors in companies that will benefit
from or facilitate 5G, located in Global Cities, the future could
be very bright,” they added.