Hainan Booming as China’s Wealthy Seek Clean Air

on March 13 2014 | in Real Estate Trends | by | with No Comments

A tropical paradise in the South China Sea is quickly becoming a hotspot for mainland luxury consumers looking for a little fresh air.

The island of Hainan boasts some of the cleanest air in China, at a time when urban pollution has risen to dangerous levels. It’s also the perfect vacation spot, complete with palm trees, warm weather year-round, and sandy beaches comparable to such destinations as Hawaii and Miami. It will come as no surprise, then, why Sanya and Haikou, cities on the island, are seeing incredible growth.

“It is quite clear why people go to Sanya: It is because of the beaches, the weather, the seafood, and the luxury relaxing lifestyle,” James MacDonald, the Shanghai-based head of China research for Savills, said in an interview with Bloomberg Luxury. “With the size of China, you need to have something unique to be able to stand out and sustain certain demand to support your property market.”

Hainan has had a reputation for being “a playground for the wealthy.” In 2009, the Chinese government revealed their plans to develop the island into a luxurious tourist spot, drawing such international hotel chains as Marriott International Inc. and Starwood Hotels & Resorts Worldwide Inc. Billionaires like Wang Dafu, the chairman of property developer Visun Group, have also opened upscale accommodations on the island.

With pollution in major Chinese cities like Beijing and Shanghai “regularly exceed[ing] World Health Organization levels considered safe,” Sanya’s housing market is thriving — excellent news for a city with a relatively unstable economy. After the 2011 market crash, housing prices fell over 60 percent. However, sales of homes rose 48 percent last year from 2012, representing the largest increase in two years. What’s more, over 80 percent of property agent Wei Yongfeng’s 2013 clients said they purchased homes in Sanya to take advantage of the city’s clean air, and “most were buying second or third properties outside their home cities.”

“A lot of buyers from the mainland need to spend winter here and clear out their lungs,” explained Haikou-based Centaline researcher Fu Zelong. “There used to be a lot of speculative money in Sanya’s property market, but what’s driving the market today is real demand for holiday homes.”

To put things into perspective,  Haikou had the third highest air quality of 74 cities monitored by the China National Environment Monitoring Center in January, with Shanghai and Beijing ranking 12th and 39th on the list, respectively. Though Sanya was not included in the survey, city officials reported only one “slightly polluted” day in the fourth quarter; Beijing, by contrast, endured 189 days of “polluted or heavily polluted air” in 2013. The pollution is largely due to China’s reliance on coal, from which the country derives 65 percent of its energy, and may be lowering the life expectancy of Northern Chinese by five years. The environmental stakes are so high that President Xi Jinping recently called pollution “Beijing’s biggest challenge.”

Although doubts remain that Hainan’s current boom can be sustained, affluent Chinese have no shortage of reasons to seek cleaner air, as the property agent Wei explains.

“What do rich people fear the most? It’s death.”

image credit: far tripper

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