Hainan housing frenzy hits the wall

Updated 2018-04-24 11:17:03

Agents, developers reeling amid island's buying curbs

A housing frenzy in South China's Hainan Province ended on Sunday night not with a bang but a whimper, as tough new island-wide curbs on home purchases left property agents and developers reeling.

Industry insiders said the new rules, which effectively curb speculative investment, are good for Hainan's long-term development and show the local government's determination to pursue a diversified growth model.

"I will lose more than 80 percent of my clients... more than 80 percent of the home buyers in Hainan are from other parts of the country. That will have an unbearable impact on the company's business," Chen Gaige, a senior manager of a Hainan-based property developer, told the Global Times on Monday.

Chen said that the regulations have shut the door on non-Hainan residents seeking to access the local property market.

Effective on Sunday night, homes in four "central ecological core areas" - Wuzhishan, Baoting, Qingzhong and Baisha - could be bought only by local residents. Those wishing to buy units in Haikou, capital of Hainan, Sanya and Qionghai, areas already under restriction, must provide proof of at least one family member paying taxes or social security for 60 months in Hainan.

Non-Hainan residents aiming to buy homes in any other part of the province must provide proof of at least one family member paying taxes or social security for at least 24 months in Hainan.

Yu Yu, a 30-something Beijing resident, is one of many people who abandoned plans to buy a home in Hainan because of the regulation.

"I started to look at apartments in Hainan at the end of 2017, both for seasonal use and investment, but I'm sad to say I have waited too long," Yu told the Global Times.

As Hainan is a tropical island favored by tourists, the province's property market has long been supported by demand from non-locals like Yu. But Sunday's announcement "marks an end [to that scenario], and in the next two to five years, Hainan's housing market will be 'in shock'," Chen said.

Another property agent in Sanya who would only give his surname as Wang told the Global Times that Sunday was "a sleepless" night for all 30,000 real estate industry practitioners in Hainan.

"From now on, the only business left will be commercial properties like shopping malls and office buildings," Wang said. "Can someone please find me another job?"

On April 13, China announced plans to develop the entire island into a free trade zone (FTZ). The country aims to establish the Hainan FTZ by 2020 and build a Hainan free trade port by 2025.

In the days after the policy was announced, housing prices in Hainan soared, rising by an average of 3,000 yuan (5.8) to 5,000 yuan per square meter, Li Renjie, founder of Chengdu-based Maijie Property Planning Co, which also has business in Hainan, told the Global Times on Monday.

In Sanya, the average home price was 38,000 yuan per square meter on Sunday, according to Wang.

"I have seen dozens of homebuyers vying for just one apartment in the past 10 days. That's a bubble, and we should not allow an inspiring opening-up policy to become a tool for speculative investment," Li said.

He added that the housing curbs show the local authority's confidence in transforming Hainan's economy from one that's heavily reliant on real estate to one achieving diversified growth.

In 2017, Hainan's investment in property represented 49.7 percent of its fixed-asset investment, ranking No.1 in the country.

"The new opening-up policy will drive the inflow of more industries and talent, which in turn will lift the local housing market and result in a virtuous cycle," Chen remarked.

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