The impact of China’s spiralling property crisis on architecture firms operating in the country has been stark, with once-reliable clients failing to commission projects and many firms being forced to dramatically reduce their workforce as a result.
The situation was triggered by a government crackdown on excessive borrowing by developers, which began in 2020 and led many to default on their debts. Notably Evergrande, the world’s most indebted property developer, which a Hong Kong court ordered be wound up earlier this year.
Following the announcement of the country’s latest economic stimulus plans to address the situation, WAN judges operating in the country talked to us about the impact on and outlook for the architecture industry.
“Many real estate enterprises have reduced their investment, thus reducing the number of projects and prolonging the project cycle, which poses a huge challenge to the survival of design companies,” said WAN Awards judge Yiqun Guan, Managing Partner and Design Director at Shanghai-based GN Architects.
WAN Awards judge Shaohua Di, (pictured below) Founder of Beijing-based practice Praxis d’Architecture explained the slump is not limited to the home building sector.
“There has been a substantial decrease in private investment in cultural, commercial and residential building projects, and government-funded construction projects have also been significantly reduced, with approvals for many building projects in third-tier cities being halted,” she said.
However, while many believe it is unlikely the industry in China will ever return to its previous levels of prosperity, there is hope that a silver lining to the slowdown could be a greater focus on the quality of design projects over quantity.
“Prior to the pandemic, the industry had experienced 40 years of boom, but this was not a healthy and sustainable economic model. After decades of hectic materialism, the slowdown of the market could lead to an improvement in the quality of space design and more refined execution,” said Di.
Ziye Wu, co-founder of Nanjing-based Mix Architecture, (2023 winner of the Judges’ Award - Rising Star and a 2023 gold award winner in the Multi-Use category) believes that ‘crisis and opportunity coexist’ in today’s China.
“Although China's architectural design has greatly developed, most of it has been aimed at quick turnover and profitability. The crisis may bring pain in the short term, but in the long run, it will bring Chinese architecture back to its more fundamental aspects of use,” he said.
Guan, whose firm has had to adapt its staffing structures and working methods to cope with the ‘new normal’, agrees with this sentiment.
“Compared to the rapid development of the past 30 years, maybe the current situation is logical. It allows us all to really settle down and do a good job on each project,” he said.
Hong Kong based architect Christopher Lye, Principal at Woods Bagot and chair of judges for WAN’s sister awards, the World Interiors News (WIN) Awards, notes that for international firms, the biggest impact has been changes to the tendering process with fierce competition for work against local firms.
"Almost all projects are required to go to design competition now, more than half without compensation," he says.
He also points to a change in the “scope and type of clients” and a move towards transit-oriented development and urban regeneration projects.
Government subsidies for the urban regeneration of pilot cities have also led to a shift in the type of projects available and provided new opportunities for some.There are also new avenues of work in niche design fields, such as healthcare and elderly care, as well as industrial facilities related to renewable energy.
“We have reduced our workforce, but at the same time we have brought in new employees who we hope will bring new capabilities to meet the challenges of new market opportunities,” says Guan.
He adds: “The growth opportunities in these areas are due to the Chinese government's strong investment in the health and elderly care sectors, as well as the rapid development of Chinese companies in the global market in the new energy sector.”
Meanwhile some architecture firms in China have pivoted to other markets like the Middle East.
“In some cases, large Chinese firms have helped design and build infrastructure projects that are part of China’s support initiatives in the region,” said WAN Awards judge Toh Tsun Lim, Partner at International Practice PEI Architects.
Some architects working on the ground in China are cautiously optimistic that the recent government stimulus measures will begin to improve the outlook for the industry.
“Market confidence seems to be gradually recovering, and we are seeing competitive bidding for high-quality land. I believe that the market is on its way to recovery”, said WAN Awards judge Hongtao Bo, (pictured below) Director and Chief Architect at China-based practice CCTN Design.
Although even with the latest intervention measures from the government, which include cuts to mortgage rates, all concede it will take time for the market to find its footing.
“The recent stimulus from the government will spur business sectors like manufacturing and commercial investment, but the property market has a large glut of product that needs to be cleared first before new projects can be considered.
“It will probably take time for people to be coaxed back into real estate investment and construction,” said Lim whose firm recently completed the Sanxiang Bank Mixed Use development in Changsha, China for SANY Group, pictured in the main image above.
“Certainly, the number of new projects has been curtailed or delayed but our current projects located in major cities for commercial office and mixed use have continued, and construction of existing projects remains on schedule for completion,” he added.
It's also important to remember that despite the current slump, in relative terms China remains a vast and hugely significant market.
“Mainland China is a massive market, even if it has slowed down for the past two to three years in terms of intensity, it is still in an advanced position for recovery. The overall volume of projects is still massive, especially when compared to the volume and fee levels in other Asia countries and globally,” said Lye.
If you have recently completed an architecture project in China our expert judges operating in the region would love to take a look. In these tough times it's more important than ever before to celebrate your best work and ensure it gains the recognition it deserves. Find out how to get started on your entry today here.
Main image credit: Tungsten Studio, courtesy PEI Architects