After hiatus, Hainan preps for land deals

09:44, March 22, 2010      

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Hainan Province has started preparing to restart approval of land grants for commercial use and new property projects, Jiang Sixian, vice provincial governor of the province, stated at the Boao International Tourism Forum over the weekend.

The soaring real estate market in the province has begun to slow, Jiang said, and the real estate sector will continue to be one of the pillar industries in Hainan over the long term, with tourism properties possessing the most distinctive value.

The southern island province had said January 15 that land grants and new property projects approval would be halted, and thereafter the province released a series of measures to regulate property transactions and land grants, as a means of curbing speculative home buying.

Hainan saw its property prices skyrocket in recent months after the State Council published a paper at the end of last year announcing a plan to turn the island into a premium international tourism destination, which attracted investors mostly from outside the province to swarm into its property market.

Investment in the province's property development rose 180 percent from a year earlier to total 6.44 billion yuan ($943.24 million) in the first two months of this year, according to the lat-est data from the Hainan Provincial Bureau of Statistics.

Real estate floor space sales reached 2.21 million square meters in January and February, seeing a surge of 380 percent year-on-year, while the net sales value jumped 750 percent to 24.33 billion yuan ($3.56 billion).

The government's tightening measures have gone into effect to slow down the province's real estate market.

Though commercial housing sales prices in February averaged 13,318 yuan ($1,950.64) per square meter, up 80.88 percent over January, home trading volume declined 46.89 percent from January in February, according to the Hainan Provincial Bureau of Statistics.

The market further flagged when the local government promulgated strict regulations March 5 that stipulated land grant money must be paid off within 60 days after land contracts take effect and officials who cannot fulfill the task of building indemnificatory housing must be transferred.

Sanya, a well-known tourism destination in Hainan Province, saw a more than 25 percent dip in both its average home sales price and trading volume in the first 10 days of March from the last 10 days of February, according to hinews. cn, an official website run by the province.

Jiang believes the province won't repeat its boom-to-bust trajectory seen in its property market in the 1990s when the central government suddenly intervened with tightening policies, bursting the bubble that saw home prices soar nearly five-fold in five years. Numerous unfinished buildings and huge bad bank loans were left over.

But Jiang was also concerned over the market's weak ability to resist fluctuations, as the province's total real estate market size remains small and is highly dependent on investment from outside the province.

The government should take measures to prevent potential problems, including regulating land transfers between enterprises and boosting the building of indemnificatory homes, which are the most important, he said.

Source: Global Times
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