Hainan housing curb sparks investor flight
Island set to boost local economy by transit consumption
Parties related to real estate including investors, agencies and developers that had thrived in South China’s Hainan before the province rolled out strict housing curbs in April are now transferring their battleground to nearby provinces and overseas markets where tourism resources are abundant.
An industry analyst surnamed Chen, who has been engaged in Hainan’s real estate industry for years, told the Global Times over the weekend that the province has witnessed effectiveness in its crackdown on speculation in the local property sector since April 22, when new regulations were rolled out.
The new rules stipulated that only people possessing Hainan hukou or certificate of paying social insurance for as long as 60 months are qualified to buy houses in the large, touristfavored cities such as Sanya and provincial capital Haikou.
“Both the purchase and supply ends have been effectively controlled,” Chen said, noting many developers are also taking a wait-and-see attitude toward the local market.
“Prior to the regulations, developers could obtain their pre-sale permit when buildings’ tops were being sealed, but now some of them have waited for three months after the construction was completed, yet still aren’t getting one,” Chen said.
Li Renjie, founder of Chengdubased Maijie Property Planning Co, which retreated from Hainan in March, told the Global Times that Hainan’s property market is now supported by very few eligible people from other provinces as well as local residents with hukou, the proportion of whom only represents 10 to 20 percent of pre-regulation buyers.
A local woman surnamed Wang, who has been working in Sanya for two years, said her family recently bought a secondhand house in the downtown area at the average market price of 29,000 yuan ($4,259) per square meter while the price was between 18,000 and 23,000 in 2017.
New houses are much more expensive at 40,000-50,000 yuan per square meter, Wang told the Global Times on Sunday.
“We wanted to take advantage of our hukou and invest in a small one as soon as possible because more demand will pour into the city [Sanya] and the island [of Hainan] as the government is trying to woo more talent via hukou offer,” Wang noted.
The one-stop hukou platform of Sanya talent services, launched on June 4, has handled 7,952 applicants with 5,222 having obtained the permanent residence permit as of Friday, according to a report of domestic news site thepaper.cn on Friday.
“After the Chinese government announced the decision in mid-April to build a free trade port in Hainan, Hainan’s tourism property resources again stepped into the spotlight. We bet on the upward trend although the market has cooled down through regulation,” Wang noted.
“Hainan is a leading holiday destination, and its prices are relatively low. The new free trade zone policies are attracting people who are looking to invest,” Yan Yuejin, a research director at Shanghai-based E-house China R&D Institute, told the Global Times.
New house prices saw an over 3 percent month-on-month increase in June in both Haikou and Sanya, data from the National Statistics Bureau showed.
Spilling over
Restricted by the housing purchase curbs in Hainan, a majority of investors and property firms have moved their bases to Southwest China’s Yunnan Province since April 22 where some cities boast similar tourism resources as Hainan, according to Li.
Li himself is now operating real estate marketing in Yunnan’s Tengchong city, where established tourism resources exist.
“After the Hainan setback, many investors are eyeing the property market in Yunnan and there was a sales craze in its Xishuangbanna Dai Autonomous Prefecture before the local government rolled out regulations in June,” Li noted.
At present, the average home price at Xishuangbanna is around 12,000 yuan per square meter, up 50 percent from the end of 2017, according to Li, while the price of another of Yunnan’s biggest tourist attractions – Dali Bai Autonomous Prefecture – also hovers around 12,000-13,000 yuan per square meter, nearly double that of Tengchong.
Betting on the strategic location of Yunnan as the bridgehead of Chinaproposed Belt and Road initiative, Li is confident that its housing market is resilient.
“Besides, the recently launched housing curbs in the capital city Kunming as well as in Dali and Xishuangbanna have normalized the local market where only qualified developers can survive,” Li remarked.
However, Yunnan alone cannot host all the purchase demand spilling over from Hainan.
“The radius range with the island in the center can be all taken into consideration, including Beihai in South China’s Guangxi Zhuang Autonomous Region, Zhuhai in South China’s Guangdong Province as well as Southeast Asian countries such as Thailand, Cambodia and Malaysia,” said Chen.
Li agreed, saying the Southeast Asian real estate sector is rising with more and more Chinese buying tourism properties there, an industry which is also trending upward.
“Agreeable climate, rich cultural and tourism resources, concise procedure of housing purchase as well as handsome return on investment have lured many Chinese to invest in such countries as Thailand and Cambodia,” Li added.
Consumption driven
On May 1, the day the visa-free policy took effect, a total of 767 foreign tourists traveled to Hainan, compared with 661 foreign tourists on the same day last year.
However, the figure is still not satisfying given the desired position of Hainan as an international tourism destination, and now as a free trade port, according to Chen.
By the end of 2017, Chinese tourists accounted for 98 percent of all tourists as the province has limited ability to attract foreign tourists, domestic news site qdaily.com reported Monday.
Chen attributed the reason to Hainan’s weak infrastructure and real economy after the real estate craze especially from the latter half of 2016 to the first half of 2017.
“Property investment is one-off and cannot support sustainable development. How to tap the idle assets and generate value is most important,” he noted.
In summer, the low season for Hainan’s tourism, where peak season usually comes between October and April, the house vacancy rate can reach more than 80 percent, according to the qdaily.com report.
“For Hainan’s future development, it should expand energy import and build the real economy industries meanwhile giving full play to its advantageous tourism resources to attract transit consumption by foreign tourists,” said Chen.
Opening more air routes and cruise lines as well as allowing foreign social media operations such as Facebook and Instagram can all help bolster the island’s charisma for foreign visitors, he opined.