The apparently illogical and severely mixed land use in Guangzhou has become a serious source of concern. The Maoist policy of organizing the city into work-unit compounds resulted in a high concentration of factories and industry in the central city, near residential areas, schools, and temples. These factories produce pollution, noise, and congestion that lower the quality of life for nearby residents. Also, the predominance of industrial land in the central city means that an insufficient amount of land has been allotted to other functions, including housing, hospitals, and commerce in particular. With economic development has come increased commercial activity, but much of the land is still tied up in centrally located factories. In addition, the land that is available is being underutilized. Only recently have high-rises become commonplace; the developments built under socialism were typically low-rise. Also, over 15% of urban land sits empty because central and provincial agencies traditionally claimed more land than they really needed.

A new high-rise residential cluster in Tianhe district on Guangzhou's periphery.	Newly constructed luxury housing on the city's periphery. Guangzhou is surrounded by villa developments.

In the post-Mao period, planners have worked to create specialized districts. Some of these districts are being built from scratch in the suburbs, while others involve redevelopment of urban land. Over three-quarters of the new construction is occurring in the suburbs, both because of space constraints in the central city and because of planners' preference for decentralized organized clusters. One of the most prominent examples of suburban specialization is the targeted industrial development zones. Five such zones have been planned: currently one, Guangzhou Economic and Technological Development Zone, is fully operational, another, in Tianhe, was opened in 1995, and the other three are in earlier stages of development. These zones provide infrastructure for industrial clients and hope to attract foreign investment. Much of the remaining suburban development consists of high-rise housing clusters and supporting commercial space, or relocated central city factories. However, there have been problems in relocating factories from the city center to the periphery; the lack of water resources on the northwest side of the city has been an especially worrisome barrier.