Hainan guards against real estate bubble
Cai Hui, 47, a businessman from Fuzhou in Fujian Province, marveled at the rocketing home prices in south China's Hainan Province, after the central Chinese government in January announced to turn Hainan into a global tourist resort.
He bought an apartment at 3,500 yuan (512 U.S. dollars) per square meter in Jiusuoxin District in Ledong County at the end of last year and sold it at about 10,000 yuan per square meter at the end of January, pocketing about 600,000 yuan in merely a month, almost doubling the money he spent. "It's like a dream," he said.
The fast expansion of real-estate market in the island drew wide attention and worries that the island might repeat its boom-to-bust trajectory in real-estate market in the 1990s. Hainan finished 6.44 billion yuan of property development in the first two months this year, up 180 percent from the same period last year, according to the Hainan Provincial Bureau of Statistics Thursday.
Real-estate sales jumped 380 percent to 2.21 million square meters in floor space and rose 750 percent to 24.33 billion yuan in trade volume in the first two months from the same period last year.
The government should intervene to map out policies and guarantee healthy development of real-estate industry in Hainan, said Zou Deci, an academician member of the Chinese Academy of Engineering and honorary chairman of China Academy of City Planning at the Boao International Tourism Forum, which opened Saturday in Sanya, a tourist resort in Hainan.
"For example, many international tourist resorts encouraged foreign tourists to come and live, but did not allow them to buy homes. Regulations like that are necessary in Hainan, otherwise the market demand might balloon to a degree that could never be met," said Zou at a sub-forum on tourism property.
Many experts, however, argued Hainan would not repeat the real-estate bubble of the 1990s style as the situation now is quite different from that in the 1990s. "Hainan will not repeat the real-estate bubble burst in the 1990s," said Jiang Sixian, Vice Governor of Hainan Province.
He believed four reasons resulted in the property bubble in the 1990s, which no longer existed now, including loose regulations when Hainan Province was just set up then; some banks' blind loans and even direct involvement in real-estate market; immature plans on Hainan provincial or county-level developments and low national GDP basis which led to low demand from across the country for property in the island.