Hainan-Sanya-Haikou Expat

If there ever was a city which exemplifies and reflects the unprecedented and close to unbelievable Chinese economic expansion, Sanya is that city. Where the five previous Sanya Real Estate Reviews covered three key Sanya real estate property development areas, Sanya Bay, Dadonghai and Yalong Bay, this latest installment, Part VI., includes a total of eleven areas!!! Incredible. Remarkable. Unprecedented in the world. I am not exaggerating and am humbled as I fondly recall my virgin arrival in August 2003 at Dadonghai Beach to find the three newly built and lonely Rui Hai beachfront apartment buildings available at a tropical beachfront bargain price of 5,000rmb psqm...

Follow up:

Also keeping in mind the backdrop of the worst global economic crisis in the history of the world impacting each and every one of us (even the rich, many whom for example, are now worth only 10 million now instead of 20 million...), here you will find the latest, most detailed and most up to date review of the Sanya property market anywhere in the world, including the coastal area from the Sanya Phoenix International Airport up to the north end of Shi Mei Bay.

We are going to talk about the ongoing development of garden apartments, villas, international resorts and golf courses, all ranging from the mid to super luxury level price ranges to fit your interests, budget and willingness to get tied down by a mortgage if necessary.

As I consider this real estate market report which I am publishing today, I must admit the word "Bubble" is also itching at the back of my mind. Yet for many fundamental reasons, this market may be a tropical paradise bubble which continues to slowly, steadily inflate and does not pop for many years.

Please do feel free to write in with your comments and inquiries.

The Uniqueness of Sanya As A Holiday Destination and Real Estate Market

Sanya can no longer be considered just "Sanya". The word is now very much an over generalization which has rightfully become a brand name covering a region of coastline stretching from the Sanya Airport 140 kilometers all the way up to the north end of Shimei Bay. Saying the magic words "We're headed to Sanya" is not much different in its vagueness than saying "We're headed to Hawaii or Cancun or Southern California or Thailand".

The government's attempt at branding Sanya amounts to "Forever Tropical Paradise" Not a bad slogan actually. Regardless of any branding attempts, intended or otherwise, Sanya is the 70's Cancun boom of today's world.

I offer the following "Seven Compelling Factors" supporting the continued economic and demographic growth of the Sanya area:

1. Sanya is a single, unique tropical destination to service the entire mainland Chinese population. No other true tropical paradise destination exists in China. The domestic Chinese market alone, today encompassing an estimated 200 million ( we may argue the range from 100 to 250 million depending on whom you ask. It simply doesn't matter. ) new middle and upper middle class Chinese, is more than enough to support ONLY 150 kilometers of coastline we can now call "Sanya". I take this position as I reference and compare other holiday destination regions with multiple destinations along 100 + kilometer coastlines such as we find in Mexico, Thailand, southern California and Florida in the United States, to name a few.

2. The population of 200 million mainland Chinese are experiencing unprecedented new wealth through massive increases in professional salaries with Fortune 500 multi-national companies, entrepreneurial profits, and windfall investment real estate profits from a booming real estate market that simply did not exist even only five years ago.

3. The country of China is experiencing an unprecedented level of national infrastructure development including thousands of kilometers of new highways, railways, high speed trains, multiple urban subway lines telecommunications and other logistical infrastructure development. We can say it is a time period for China very similar to the post World War II infrastructure boom of the United States when President Roosevelt mandated the building of the national highway system.

4. At the luxury resort, golf and real estate level, there is a regional high income population located in places like Hong Kong, Singapore, Korea, Japan and Taiwan who are also a qualified target market with a clear interest to visit Sanya. While some wish to gently acknowledge customer service levels in China are not yet at the same international standards as other global locations, the super luxury resorts such as the Mandarin Oriental, Ritz Carlton, Banyan Tree, Le Meridien and others soon coming, these are in fact, fabulous holiday and business destination resorts.

5. While I hear lots of talk about the major commitment the Hainan government has made to international expansion, I believe such development faces many challenges in terms of human capital and is going to take many, many years to make reasonable progress. In the meantime, the mainland domestic market alone, not to mention the affluent clients from the regional market, are more than enough to support Sanya's level of economic development and growth.

6. Chinese have lots of cash. China will suffer the least in this global economic crisis and in fact, will be a major part of leading the world out of it toward economic recovery. Along with Hong Kong, Singapore and Taiwan, citizens of China are the most liquid in the world greatly supporting any interest they have to buy property.

7. Mortgages are a NEW business service in China. Even just five years ago, mortgages were unheard of in China. And so were car loans. But back then, real estate prices had not yet doubled to quadrupled. So in this new market of 15,000rmb apartments instead of 5,000rmb apartments, real estate buyers will need mortgages now available at more and more reasonable terms to feed the real estate frenzy. Let's hope the Chinese keep their wits in the face of their new found wealth and sense of capitalism and don't overdose on debt and turn their home equity into an ATM machine as the American's did.

General Market Overview

For those of you in a hurry to read the entire report, the property market price range of Sanya along the stated 140 kilometers of coastline exists as follows:

Luxury Level At/Near Beach/Golf: 25,000rmb to 50,000rmb psqm
Mid Level At/Near Beach: 12,000rmb to 20,000rmb psqm
Off The Beach 500m to 1.5 kilometers: 8,000rmb to 10,000rmb psqm
Local Nice Off The Beach/In The City: 6,000rmb to 9,000rmb psqm

You are forewarned by these rather wide price ranges to compare many properties before making an offer. I talked today with an intrepid little sales boy keen on fooling a foreigner by telling me prices were 13,000rmb psqm for a 9th floor unit at their new fabulous complex along the Sanya River. Attempts to inform him that said price was completely out of line with comparably located properties less than one kilometer away only served to encourage him to continue spouting off his nonsense more brashly to prove I'm the idiot foreigner. Indeed, idiots might have paid them such an amount for an apartment in the city. Please don't be one of them.

The Sanya real estate property market held up very well during the downturn past six months downturn and looks poised for continued steady increase in residential property values both along the beach and at new developments which would be called 2nd and 3rd line off the beach.

In addition, directly impacting the residential real estate market, note that the current level of growth for newly planned construction of international brand resorts continues at a remarkably high level. I can't think of another blossoming tropical destination which has experienced, in such a short period of time, such a high level of infrastructure development plus investment commitment by international resort brands for oceanfront and golf development. It is noteworthy.

Moving onward to details along each coastline region starting from the Sanya Bay airport area (known as Haipo) along and up the coast to the north end of Shimei Bay where we find the Le Meridien Resort, here are the current region categories.

Sanya Bay Airport (Haipo)
Sanya Bay
Sanya Bay Phoenix Watertown Mangrove Tree Area
Sanya City
Sanya Times Coast Area
Lu Hui Tou Area
Dadonghai Beach
Yalong Bay
Haitang Bay
Qingshui Bay
Shimei Bay

Haipo Beach Area

It is important to assess the development of resorts along the Haipo and Sanya Bay coastline. Somewhere along the Haipo/Sanya Bay beach area we will find the opening of new Accor's Pullman and Starwood's Four Points Resorts. These are in addition to the existing Kempinski, Howard Johnsons, Days Inn, Grand Soluxe, and Holiday Inn Resorts already up and running, not to mention numerous Chinese Brand resorts, the HNA Resort/Convention Center and the beachside Olympic Volleyball Stadium.

Beachfront residential in this area seems ranged from 12-18,000 psqm at the low end of the range for garden apartments. The top end of the range is represented here primarily by the Luneng golf development which includes your choice of apts or villas in the 20-30,000rmb psqm range.

Remember that the Haipo and Sanya Bay beach areas offer many kilometers of quiet, tranquil, palm-tree lined beach. The weakness are in the sand and water quality. The sand is not that same fabulous white sand beach we all want, and the water is also less vivid and muddier. It's not really bad, just not anywhere near as good as Dadonghai or Yalong Bay. Furthermore, water quality is worse in toward the city/river tributary and better further out past the Howard Johnson and to the Kempinski, which has a fabulous private beach for it's guests.

Sanya Bay

As we move in to Sanya Bay running along the Sanya city area, prices of the various garden apartment complexes along Sanya Bay Lu are falling in the 10 to 12 to 20,000rmb range.

To further clarify the low end of the range, apartments without ocean views which are located 3-4 buildings back from the beach indicate a price range at the 7-10,000rmb psqm range.

Which units along Sanya Bay, you ask, are going for 10 to 12,000rmb? I know there are lower level units in the well known Bin Hai Lan Tian property at Jin Ji Ling Lu with asking prices of 12,000rmb. Similar apt complexes with lower level units facing the city, no ocean view will have prices in the 10,000rmb range.

Which units are 20,000rmb plus? Answer the ones that are high up....owners with apts at the 18th floor or higher are holding their asking prices quite high up in that range. Are there plenty of buyers? Probably a few, but I doubt robust demand...

Fat Daddy's Restaurant & Bar Located On Sanya Bay Lu at the corner of Jin Ji Ling Lu

Sanya Bay Phoenix Water Town Mangrove Tree area

This is a new area to pay attention to. Heading directly up Jin Ji Ling Lu from Sanya Bay Lu where you find Fat Daddy's, Coffee Time and Bin Hai Lan Tian, go exactly 1.4 kilometers to the corner of He Dong Lu and you will find Phoenix Water Town on your left...asking prices here in the sales office start at 8-9000rmb psqm. More importantly, across the street and just another half a kilometer down the road almost to where He Dong Lu merges with the Airport Road, you find a huge land area designated for a luxury level apartment complex by Mangrove Tree, the same folks who have the Mangrove Tree resort up in Yalong Bay.

When you reach the Airport Road merging to the left, you will find three additional new garden apartment developments with asking prices starting at 7,000rmb psqm. One of them is named Kai Feng Garden. So imagine if you will, these apartments offer ocean views of Sanya Bay about 1.4 kilometers west...the view in fact is quite lovely.

Key points to keep in mind:

1. The area in front of these apartments is occupied by the low-lying villa area of Phoenix Watertown.
2. There is a large area becoming a man made lake between Phoenix Water Town and the next complex Kai Feng Garden. So then, residents here will enjoy large open spaces, a large man made lake with small motorless leisure boats, and distant views of the ocean with villas down below. Not a bad little neighborhood to settle down less than 10 minutes drive to the beach in the 7 to 10,000rmb psqm price range.

This development area fulfills my expectation of second and third line property development off the beachfront in Sanya. So far, it seems in line with what one might expect.

For reference, other urban areas located on the coastlines, such as southern California typically describe real estate location in proximity to the beach as follows:

1. Beachfront
2. Oceanfront White Water Views (you can see the waves breaking)
3. Oceanfront
4. Ocean View One Block to the Beach
5. Ocean View 5 minute Walk to Beach
6. Ocean View 10 minute Walk to Beach
7. Ocean View 1 km to Beach
8. City - 5 minutes drive to Beach

Sanya City

For those of you interested in picking up some property in Sanya city, its actually not such a bad idea if you feel fairly comfortable in the local city environment. There are a number of smaller apartment complexes where you can pick up local apartments in the 5-9,000rmb psqm range. And you're not more than 5 minutes from the beaches at Sanya Bay and Phoenix Island.

The areas of Sanya City to consider would include the neighborhoods running along the Sanya River, Lin Chun River, and a couple of downtown locations along Jiefang Lu, Sanya city's main drag.

Lu Hui Tou Area

The Lu Hui Tou area is quite fabulous, the other up and coming luxury level area of Sanya with the Banyan Tree Resort on the southwest coastline and the amazing new Intercontinental Hotel complex coming up on the opposite side of the peninsula at Xiao Dong Hai. Adding in the golf course and Ban Shan Ban Dao apartments & villas nestled nicely in between, you have the makings of quite the chic neighborhood.

Price range Reference: There are now two penthouse apartments available for sale at Ban Shan Ban Dao with an asking price of 26,000rmb psqm.

If you are a serious buyer interested in viewing, do contact us to arrange an appointment. This is a good time to mention that we offer an excellent property service with a reasonable fee that gives you the needed extra level of security and confidence making a Sanya property purchase, working with an experienced local real estate agent and more importantly, an attorney to oversee every step and every piece of paper you sign. If you're buying a property worth 2-5 million rmb, the additional 15,000rmb fee we charge is a "peace of mind" value for personal and legal guidance every step of the way. The purchase process in China, especially between private home owners does not encourage trust and encourages paranoia every step of the way as it lacks a neutral escrow account to equally protect both buyer and seller.

Sanya City Times Coast Area

Well Well Well...where do I begin here? How about LIARS!!! DIRTY ROTTEN SCOUNDRELS!!! WHAT, pray tell is Mario talking about? I'm talking about the fact that when people bought at Times Coast during the past three years, they were told and even shown the property area mini-model in the sales center indicating by visual and verbal assurance that the island area in front between them and the ocean was going to be built with LOW RISE buildings, a convention center building, shopping, that sort of thing....Ahem, yea well, now that they've pretty much sold out the Times Coast Area, guess what? There's a new mini-model of the island with the new plan to build the same kind of HIGH RISES they built at Times Coast. I bet fifty thousand million yuan the owners KNEW it all along. SCOUNDRELS!!!

Moving on from my sarcastic tongue in cheek venting, do we like the Times Coast area? I would say, sure, what's not to like? Prices of second hand apartments in the existing first six buildings start at around 9,000rmb psqm for lowest level units. Again, here owners of high level units think they own 24 karat gold mansion and are asking upwards of 20-25,000rmb psqm which I personally think is ridiculous. On the other hand, the marina area has, as planned, placed several absolutely gorgeous beautiful new power boat yachts, sail boats and catamarans along the docks. Sweet stuff to be sure, making Times Coast quite simply, one of the nicest and hippest areas to live in Sanya.

The last two buildings of the Times Coast strip are asking 18,000rmb for the last units starting at the 18th floor, again I think this is a ridiculous "nobody's buying at that price" kind of price. Meanwhile, on the inner corner, they are building the hotel and apartment building. I was just told two days ago that for this building asking price is 12,000rmb psqm for the 2nd to 4th floors and 14,000psqm for the 4th to 7th floors. I don't know. Seems, as I said, a really nice joint, unique location, but pricey.

Price Range Reference: A 6th floor apartment in building #4 recently sold for 11,000rmb net psqm.

Dadonghai Beach

Wow...be prepared and forewarned before you plan to ENJOY a stroll through downtown Dadonghai for the next two years. I might say you simply make believe you are playing a game of MONOPOLY with your friends. Do NOT pass GO, do NOT stop to collect $200, Go DIRECTLY and ONLY to the beautiful beach and boardwalk!! Said beach happens to be still in my opinion one of the best beaches in the world...a perfect 2.5km crescent beach of nice sand, nice water, lots of babes, good for families, and the best boardwalk / cafe area someone on holiday could ask for to hang out and enjoy tropical island beach paradise. So then what the heck is dear Mario talking about?

As those who live and work there know and are suffering greatly, the very heart of downtown Dadonghai at the main intersection of Hai Hua Lu Hai Yun Lu is in the throes of massive, noisy, miserable rotten, it will be great two years later, construction projects. On the northeast corner, on a spot of land barely large enough for a four car garage and a dog house, the military (who owns all of the land in the area and most all of the land everywhere else in Sanya ) has made a deal with some real estate developer to bring us a very tall, very skinny sexy supermodel, oh sorry, very tall, very skinny 28 floor apartment building with, get this dear readers, a whopping 40 parking spaces. Yes right, NO underground parking....unbelievable. China is in the midst of the greatest auto boom in history and these foresighted morons...oh forget it.

Let me continue as we walk together across the street diagonally to the southwest corner where that lovely old white purple/pink pastel Chinese hotel used to be. It has been completely demolished to piles of rubble during the past three weeks, making way for:

1. A 28 story apartment building
2. A 28 story 5 star Chinese hotel
3. A 28 story commercial business building

Three more big buildings in tiny little Dadonghai? Yes dear readers, three more big ones, but in fact, the land space is there to accommodate them. These four new buildings in total are undoubtedly being built too tall, however if you look directly in front of the three new buildings on the southwest corner, you will find In Tyme Resort with its three well spaced buildings already there. So then you can realize that the land space on the southwest corner is plenty big enough for three new buildings directly behind In Tyme Resort in line back to back with In Tyme's three buildings. With a little luck, they'll build some underground parking too. Alas, the planned height for all of these buildings is a classic case of greedy overbuilding. The end result in my opinion will be as follows:

1. Dadonghai will become a very overcrowded and therefore, far less enjoyable place to hangout. Local merchants will get richer and be much happier. See my other post of nightmare photos of other overcrowded Chinese beaches. The thing to remember is this: The Chinese won't mind. They're used to such living conditions and development. It is only us foreigners who scratch our heads in frustration and wonder.

2. Dadonghai apartment prices in the current four main garden complexes, Rui Hai, Lan Hai, Jin Ling and Lu Neng, will probably find their property prices doubling from the current 12 to 25,000rmb psqm to 25 to 50,000rmb psqm. I know I know. Sounds nuts but in fact, two years later after all the construction is finished, Dadonghai is going to be a pretty hot spot, despite being overcrowded and with inadequate parking. It has been suggested to me that the downtown Dadonghai area will eventually forbid cars, a rather forward thinking idea, same as that which is planned for the Haipo beachfront area.

One more important thing about downtown Dadonghai: the Summer Mall Department Store is also now being completely renovated and will have a rather cool looking curved glass architectural design....again Dadonghai is receiving quite the face lift for the future.

Coffee World & Pizza Corner Located Beachfront In the Herton Hotel Lobby Level at Dadonghai Beach

Price Range Reference: An 11th story unit in Lan Hai Hao Yuan recently sold for 13,000rmb net psqm and this was probably a bargain by 1-2000rmb psqm but the apartment exists right in the middle of said construction zone which the owner couldn't tolerate and wanted out.

Yalong Bay

We can easily recognize that Yalong Bay was not originally intended for residential living. The area continues as a lovely, chic yet isolated luxury beach and golf club area with Princess Palace, Aegean Conifer and other properties offering luxury level living in the 30 to 50,000rmb psqm range. These properties represent more typically the expensive luxury level of winter vacation beach and golf homes. The area represents a great opportunity for people who are interested in the higher luxury category and price range found here.

A Word On Hai Tang Bay, Qing Shui Bay and Shi Mei Bay

This stretch of coastline starting north of Yalong Wan and ending south of Boao needs to be understood in terms of planned international brand resort development.

I have it on very good confirmed source that these areas will have the following resort developments confirmed for construction:

Hai Tang Bay: a super luxury Fairmont Resort and a Raffles Resort

Qing Shui Bay: Double Tree Resort, Conrad Resort and Outrigger Resort

Wow. That list of planned resort brand is amazing and important to note as you consider the impact of these resorts being built side by side with neighboring apartment/villa complexes you may be considering buying.

Golf Golf Golf

A related factor impacting your possible property investment and lifestyle is that according to golf development industry professionals I have spoken with, four additional golf courses are now or soon under construction along the Hai Tang Bay coastal area. These will add to the existing golf course locations out near the airport, at Lu Hui Tou, Yalong Bay Golf Club and Sun Valley Golf Club at Yalong Bay, plus Ocean Bay Golf Club and Kang Le Hot Springs Resort & Golf Club located at the north end of Shi Mei Bay nearby the beautiful Le Meridien Resort.

Haitang Bay

Hai Tang Bay, just north of Yalong Bay, begins the new frontier of gorgeous virgin beach eastern coastline about to quickly go holiday mainstream. I'm just off the phone to confirm latest prices with the sales team at Crab Apple Bay apartments located on Haitang Bay. They are offering garden apartments at around 14,000rmb psqm and luxury level private villas at up to 30,000rmb psqm. Swanky stuff to go along with Fairmont and Raffles...check it out.

Qing Shui Bay

As I mentioned, Doubletree, Conrad and Outrigger are planning beachfront resorts along this area but I have not yet investigated in detail any particular apartment complexes under construction or in planning here. I consider it fairly easy to guess the price range we will find at apartment/villa developments coming in the future.

Shimei Bay

Here we start with Starwood's Le Meridien Resort, a beautiful spot at the north end of Shi Mei Bay. Directly next door Starwood will be opening a Luxury Collection Resort property. At the same time, I am told other apartment/villa developments are coming and I think we can pretty easily get an idea of the price range we will find when they do come up for sale.

The Final Word: Taxes

Sales tax, individual tax, and capital gains tax(minimum 30% of your gain) are currently canceled as part of the government effort to stimulate the economy. This represents huge savings of potentially hundreds of thousands of RMB against the risk that at any moment the taxes will be partially or fully reinstated.

Recent buyers of properties since January 2009, priced around 1,000,000rmb, paid approximately 60,000rmb in taxes.

Conclusion and Disclaimer

Most of us can easily be impressed by the happenings along the Sanya coastline. The combined effort and impact of international resort development, government infrastructure development and real estate development is rapidly transforming this tropical island paradise. The development of Hainan Island's southern and eastern coastline which we call "Sanya" brings us a diverse mix of impressive luxury to be admired and enjoyed alongside an increasingly popular and affordable winter escape for the mainland masses.

On the more serious real estate investment side of the picture, it is very important to note the infrastructure development taking place, including by the way, the high speed rail being built all around Hainan Island and soon to connect Haikou with Shi Mei Bay with Sanya. Yet it is anybody's guess how much longer the tourism and real estate boom will continue. While we don't forecast a problem with overbuilding of real estate inventory for reasons stated above, when will the inevitable cyclical dip in property price ranges finally come along?

Forgive me and please do inform me of any factual or statistical errors which I may have made as the author of this article. Please do help by letting me know as you may find any. My sincere thanks to many friends and colleagues across China without whose knowledge and time I would not have been able to complete this important and unique report. I hope you find it helpful, valuable and an enjoyable read.

If you are a serious buyer interested in viewing select properties and feel it would be wise to have some extra protection and expert consulting during the process, do contact us to arrange an appointment. We work with with a team of trusted, experienced local real estate agents AND attorney. We offer an excellent property service with a reasonable fee that gives you the needed extra level of security and confidence making a Sanya property purchase, working with experienced local real estate agents and most importantly, a competent, English-speaking attorney who knows the nuances of real estate and agreement law to oversee every step and every piece of paper you sign.

If you're buying a property worth 1 - 5 million rmb, the small additional fee we charge which includes legal representation is a "peace of mind" value for personal and legal guidance every step of the way. The purchase process in China, especially between private home owners does not encourage trust and encourages paranoia every step of the way as it lacks a neutral escrow account to equally protect both buyer and seller.

Best of Luck!

Mario Cavolo
www.sanyaexpat.com
www.mariocavolo.com