Government plans to make China's southern island province of Hainan an international tourist resort have cut the supply of housing as owners and developers hold out for huge profits.
More than 200 property buyers had arrived everyday since the end of last year when the government unveiled plans to turn the tropical island into a top international destination by 2020, said Li Zhuo, a salesman with Rongyu Project in Haikou, the provincial capital.
Prices were rising by about 1,000 yuan ($164) per sq m each day on some properties and properties that had been selling for 15,000 yuan a sq m at the beginning of the year were now asking 20,000 yuan, he said.
The Shanhuwan real estate project in Haikou had sold 600 of its 643 apartments in two weeks despite prices jumping almost 50 percent, said salesgirl Min Xia.
In the popular tourist destination of Sanya, the average price of Shanyuhu project had soared from 13,000 yuan a sq m in November, to 28,000 yuan as of Thursday, and was almost sold out.
The tourism promotion blueprint, which was officially announced on Jan 4 and is expected to be approved by the National Development and Reform Commission, drew real estate developers and investors from home and abroad, driving up the property market to fever and causing property bubble fears.
"Many home developers and owners suspended sales, expecting higher prices and profits," said Liu Haiyi, assistant general manager of Hainan Jintai Real Estate Development Co.
In an effort to clamp down on potential speculation, the provincial government on Jan 15 suspended the leasing of land and approval of projects, which worsened speculation concerns.
The suspension was aimed at cooling the overheated sector, but it may have led to a second wave of price hikes, said a property agent surnamed Wu.
"Sufficient housing and land resources could be provided to fulfill demands of the market and the tourism promotional campaign," Wei Liucheng, secretary of Hainan's provincial Party committee, said Tuesday.
"We will blacklist real estate developers who seriously disturb the property market order and not approve any new land for them," he said.
Official statistics show 58,489 commercial homes, totaling almost 6 million sq m, were on the market in Hainan's major cities as of Monday.
In the first half of 2009, Hainan had approved development of 3,164.7 hectares of land, including 1,522.65 hectares already under construction, according to the provincial administration of land, environment and resources.
Wei said homes for local residents were a priority. The authorities should conduct comprehensive supervision campaigns and work out plans for land approval for residential purposes. Strict penalties should be meted out to those who violated land use and transfer regulations.
Hainan is one of the five special economic zones. Agriculture and tourism are its pillar industries.
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