China’s big cities offer rent-free industrial parks in battle to lure startups
The programmes aim to cut expenses for tech firms and fill empty space left after years of overbuilding
CHINA’S biggest cities are offering companies free rent in industrial parks as they compete to lure startups and advanced manufacturers, igniting what local officials are calling a “city war” for top-tier enterprises.
Since March, Shenzhen, Hangzhou, Guangzhou, Huizhou and Suzhou have all launched “zero-rent” policies, waiving lease costs for two to five years in selected state-owned industrial parks. The programmes aim to cut expenses for tech firms and fill empty space left after years of overbuilding.
The competition intensified on Jul 31, when Guangzhou’s Development Zone and Huangpu District announced 13 pilot sites covering 150,000 square meters (sq m). Companies signing three-year leases will get two years rental free, while six-year contracts qualify for three years.
Founded in 1984 as one of China’s first national-level economic zones, the Guangzhou Development Zone has long ranked just behind Suzhou Industrial Park in national performance evaluations.
“Zero-rent policies are the new battleground in local government investment campaigns,” a Guangzhou official told Caixin.
The trend gained momentum after a June 2024 State Council regulation banning older incentives such as cheap land, tax benefits and direct subsidies. At the same time, Beijing urged state-owned enterprises to channel venture capital into startups and critical supply chain sectors.
A NEWSLETTER FOR YOU
Tuesday, 12 pm
Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
With traditional incentives outlawed, local governments sought fresh tactics. Shenzhen’s state asset regulator moved first in March, offering 100,000 sq m of space in city-owned parks under the slogan: “We only collect dreams, not rent.”
Other cities soon followed. Beijing’s Haidian District promised 100,000 sq m of free space for AI companies. Suzhou and Chengdu offered 100,000 and 50,000 sq m, respectively, in April. By July, Hangzhou had unveiled its “Seedling Plan,” pledging at least 200,000 sq m of state-owned space rent-free for up to five years.
“These policies create a strong siphon effect,” the Guangzhou official said. “For early-stage firms, rent is a heavy burden. Many simply move wherever the overall costs are lowest.”
Competition is fierce even within cities. In Guangzhou, districts such as Zengcheng and Nansha are considering their own free rent offers to avoid falling behind Huangpu.
A policy adviser in Suzhou said governments are chasing a limited pool of “good companies”, forcing many startups to negotiate with multiple cities and accept the most generous offer.
“The central government doesn’t want cut throat competition, but with weak economic growth, local officials are under pressure to boost jobs and tax revenues,” the advisor said.
Another factor driving the free-rent push is the glut of empty industrial parks. Since the pandemic, many factory sites have been abandoned. In Suzhou, rents have dropped about 30 per cent since 2020, but buildings still sit vacant.
Nationally, industrial park vacancy rates hover between 30 per cent and 50 per cent, according to Cushman & Wakefield data cited by the Mingyuan Real Estate Research Institute. In some suburban areas, more than half the space is unused.
Even in top-tier markets, oversupply is evident. Colliers International reported that Shanghai added 500,000 sq m of new industrial park space in the first half of 2025 but absorbed only 67,000. The vacancy rate climbed to 29.2 per cent, rising for the 12th straight quarter.
Shenzhen fared better, with 220,000 sq m leased in the same period, cutting vacancy to 22.1 per cent. Still, with 840,000 sq m of new supply expected each year through to 2028, analysts warn that oversupply will persist. CAIXIN GLOBAL
Copyright SPH Media. All rights reserved.
