According to a recent New York Times profile, an end-of-the-year memorandum from the Chinese cabinet has set off a real estate boom on Hainan Island just south of the Chinese mainland. In the memo, Hainan was designated a “test case” in developing an “internationally competitive tourist destination.” Investors are interpreting that as a no-holds-barred effort to remake Hainan into the Chinese equivalent of Monaco, Las Vegas, and Hawaii.
Currently, gambling is illegal everywhere in China except Macao. With the Las Vegas comparison comes speculation that some form of gambling will also be allowed on Hainan. The island is swarming with stories of capitalism and excess:
- A developer is building “Asia’s largest hotel,” with space for a casino and greyhound racing
- The manager of a golf course that charges $180 a round is trying set the Guinness World Record “for the most spas anywhere;” he also has a story about a man coming with a bag filled with cash to put a deposit on two of the course’s 220 luxury villas
- Five-star hotels on the island were charging upwards of $1,500 a night during the recent Lunar New Year
- Property sale prices in the island’s two largest cities, Sanya and Haikou, increased 50% from February 2009 to February 2010
- Four luxury apartment towers are getting prices similar to Manhattan apartments
The buying frenzy has drawn some criticism within China, and the provincial government put a temporary freeze on new developments in mid-January. The manager of a yacht club says that there’s “no real economy” on Hainan, just “a bubble economy.”
The Times article points out that early in the 1990’s a similar boom occurred when the Chinese government declared Hainan a “special economic zone,” but fizzled out within a few years. It will be interesting to see if the current developments meet the same fate, or if a Chinese Vegas emerges in the South China Sea.
[Image credit: Shiho Fukada/The New York Times]