Sanya Expat

As indicated in this recent release, Hainan property prices went ballistic starting in January...locally it is also very clear that there are more than a handful of owners with their properties for sale to lock in profits....very wise from our point of view...Cheers, Mario

Home prices in Haikou, capital city of Hainan province, soared 31.8 percent year-on-year and 19.5 percent month-on-month in January 2010, reports Xinhua, citing data from the Haikou Investigation Team of the National Bureau of Statistics. The rate of increase accelerated by 21.9 percentage points compared to the previous month, setting a new record high.

In January, prices of previously-owned homes in Hainan province rose 29.5 percent year-on-year, while prices of newly-built homes rose 33 percent year-on-year or 19.1 percent month-on-month. Prices of newly-built normal residential homes rose 37.8 percent year-on-year or 20 percent month-on-month. Prices of high-end residential homes rose 29.3 percent year-on-year, while prices of high-end apartments rose 31.5 percent year-on-year or 17.5 percent month-on-month.

Those of us residing on Hainan Island, China, particularly in Sanya, can enjoy feeling a bit puffed up due to a mainstream media front page story out of Market Watch's Hong Kong bureau on property prices gone wild here. When property values double in price in less than two weeks it should make the front page news. Indeed, these price moves could make derivatives traders blush.

As the publisher of Sanya's Quarterly Real Estate Report, our research and history on the ground in Sanya since 2006 led us to predict near the end of 2009 that prices for ocean front properties would and should level off in the 15 to 30,000rmb per square meter range. That's US $200-$400 per square foot.

Well, we were wrong. Wrong because reasonable based on the past doesn't apply in today's economic environment, both globally and in China.

Next page - taking a closer look to gain some insight.

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The January 29th edition of China Daily features a front page story on skyrocketing real estate prices here on Hainan Island. In the past month, prices here have been driven up from already too high prices an additional 30% in a orgiastic buying frenzy.

This recent development coincidentally occurs in an orchestrated asset dance as during the past month, the Chinese stock indexes began to decline while the Chinese government makes a special proclamation that Hainan will receive special attention and incentives to be developed into an international luxury level destination.

Furthermore, it needs to be understood that during the past year strategic decisions were made to take Hainan Island upmarket as a more exclusive, luxury level tropical island playground for the wealthy and privileged. St. Regis and MGM Grande will join the resort lineup at Yalong Bay. Shangri La, Fairmont and Starwood's Luxury Collection Malus will flagship the Haitang Bay development. Lu Hui Tou's Banyan Tree Villas and Intercontinental will be joined by Four Seasons alongside the peninsula's exclusive golf course and Ban Shan Ban Dao luxury apartment & villa development.

Next page: Where to put your money next?

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Below you'll find three links to fresh articles at www.globaltimes.com on the Chinese government addressing the property bubble issues. Well, take that point with a grain of salt. The people at the top of government and big business know darn well what influence and impact their decisions have. Their strategic decisions to engage policies and make public announcements are all part of their managing the public's view of what's happening while at the same time managing the economy as they see fit. Their job is not easy. They are often walking a thin line between stimulus and decline in the markets.

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UPDATED By Mario on 1/14 We just checked Shenyang's new "Pudong" area of Shanghai, quite representative of other 2nd tier cities in China. A huge development area south of the river which runs east to west, site of Shenyang's Olympic Stadium, new International Convention Center, new Walmart and subway stop - prices are in the mid 5000's psqm for nice new apartment gardens. There are several large new garden apartment communities in Shenyang along the new development area along the riverside in the 5 to 7000rmb/psqm range. While just a couple minutes to the north along the southside of the river you find true luxury level apartments along the new golf course asking prices at 8,000rmb/psqm facing south and 10,000rmb/psqm facing the golf course/riverfront.

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Our good friend and business owner Gene Kern of the successful Coffee World / Pizza Corner restaurants here in Sanya and Haikou tells us that Haikou oceanside properties are going bubble, bubble, bubble lately...as always in China heading into the Chinese New Year holiday...a funny thing as he also mentioned its quite cold up there in Haikou on the north side of the island with that "old North wind" blowin' down...we know Haikou is not as nice as Sanya, however oceanfront is oceanfront and Haikou a pretty pleasant 3rd tier city to hang out...Cheers, M