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November 15, 2013 6:47 pm
There is a long stretch of sand full of tourists in the Chinese holiday city of Sanya but no one is sunbathing. Aside from a handful of Russians, the local Chinese who make up the majority of beachgoers huddle under umbrellas: for a culture that still prizes pale skin, suntans are not in vogue. Yet business is booming and the tropical island of Hainan, where Sanya and its five-star resorts are located, is fast being dubbed the “Hawaii of the east”.
Hainan attracts the well-heeled and the beautiful. Some holidaymakers sport Speedos, others wear stilettos. Among the many golf courses, spas, shopping malls and resorts that have sprung up are private villas and apartments sold as second homes. Hainan is a short flight from many of China’s traffic- and smog-filled cities and, without the visa requirements needed for foreign travel, it is the perfect weekend getaway.
Escape, though, is largely restricted to the wealthy. Depending on location and ocean views, a 200 sq metre apartment in Sanya will cost a minimum of £1m rising to £10m for a 700 sq metre super-villa. “Demand is going up,” says Stanley Cheung, senior manager of investment and sales for southern China at the international estate agents Savills. “The house prices [in Hainan] have had 10 to 15 per cent annual growth.”
Yet beach resorts are an anomaly in China. The world’s most populous nation boasts 18,000km of coastline and more than 6,000 islands – but ask any Chinese person to name a famous beach and, aside from those in Hainan, they might struggle. Instead, Chinese tourists prefer to spend their holidays visiting historic cities in Europe and the US – a trend that feeds into second-home purchases.
“We know the Chinese love shopping and they love going to London and Paris,” says Nick Candy, chief executive of Candy & Candy, which co-authored a recent report on the global high-end leisure property market. “The wealthy are buying second homes – we are seeing that in London, whether as investments or for their kids as they study. But they are not necessarily always buying their second homes as leisure homes.”
A lack of alternative investment opportunities in China means that property is considered a primary asset. Hainan was earmarked by the Chinese government as a test case for developing “an internationally competitive tourist destination” in 2010, making property a particularly tempting investment.
“People buy homes in Sanya for two purposes,” says Raymond Hau, general manager of Hainan’s Sun Valley Golf Resort, which plans to build upmarket villas. “One is for the value to increase. Second is for their parents who are retired and cannot stand the cold weather in northern China. In November they start coming in and in April they start leaving.”
Shanghai-based Ms Yao, 55, who requested that only her surname be used, bought a small two-bedroom apartment in Hainan as a holiday home in 2011 and its value has since doubled. “Previously I hadn’t visited Hainan much,” says Yao, who owns multiple properties. “But now I spend nearly all the holidays there. I’m going to retire soon and Hainan is a heaven for elderly people on holiday.”
James Macdonald, head of research for Savills China, believes that demand for holiday homes in Hainan may grow further in the next decade as retirement resorts gain traction in China. Tradition dictates that the elderly stay close to their families who help to care for them. But with a rapidly ageing population this might change for those with means.
For now, however, it is the millionaire jet-setters who are making their presence most felt. Owning a property on Hainan has become a status symbol. New marinas have popped up alongside designer stores, fine-dining restaurants and five-star resorts like the Hilton in Yalong Bay near Sanya. Membership to the Visun Royal Yacht Club in Sanya, one of China’s largest, involves a one-off payment of £18,000, plus annual fees. Sanya Deyou Real Estate is offering a villa for £6.17m, with two parking spaces, a 1,000 sq metre garden and private pool. At the cheaper end, Housing Wealth Management Center has a two-bedroom apartment with sea views and balcony on sale for £823,696.
With few foreign visitors to Hainan, villas and apartments are designed with Chinese clients in mind. Chinese buyers prefer resorts to secluded huts. They offer everything from spas to conference rooms – crucial for businessmen who use their holiday homes to network. The sail-shaped skyscrapers on Sanya’s Phoenix Island are located on an artificial spit of land jutting into the sea and is being dubbed a “24-hour Las Vegas-style” leisure destination. Harvest Real Estate is offering a two-bedroom apartment there for £1.43m.
It does not seem that development on Hainan will slow down any time soon, but prices fell there earlier this year and history offers a cautionary lesson. In the 1990s, the government designated Hainan a special economic zone, leading to vast property investment on the island. Some made their fortunes but the bubble soon burst and the economy lay largely dormant for a decade. For now, however, finding a free umbrella on the beach remains the biggest challenge.
● Temperatures range from 18C to 29C. According to the People’s Daily, Hainan has 300 sunny days a year
● The world’s largest duty-free shop is due to open on the island next year. In the first half of 2013, sales from duty-free shops in Hainan hit Rmb5bn and attracted 2m people, says state-run news agency Xinhua
● Buyers who are not local to the island cannot secure a mortgage, so must buy in cash
What you can buy for . . .
£500,000: A 250 sq metre flat in Haikou, the largest residential district
£1m: A 200 sq metre flat on the Sanya waterfront
£5m: A newly built, 600-800 sq metre, high-end villa in Sanya
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