Zhou Yafen, 59, a retiree, saw crowds “rushing madly to buy apartments” in Hainan province a day after the government announced its plan to transform the island into a world-class tourism paradise.
“Property prices shot up like an arrow,” she said. She owns a 125-sq-m flat in the provincial capital Haikou, which she purchased in 2005. Its value today has escalated by over eight times.
“Just one word from the government, and miracles happen! If only I had money to buy another property, I’d be so rich now,” she said in a phone interview with The Sunday Times.
Nowadays, one of the hottest topics is how to bao fa (get rich overnight) by betting money on China’s modern-day God of Fortune – the government.
All it takes for both stock and property prices in the area to skyrocket is Beijing’s announcement of a new mega project somewhere.
In Hainan, for instance, real estate prices increased 20 percent in January alone, while companies’ share prices like that in Lawton Development, which owns hotels in Hainan, Haikou Agriculture and Hainan Expressway, almost doubled in value within five days of the announcement.
On 4 November 2009, less than two hours after the much-awaited Disneyland in Shanghai was finally confirmed, a parcel of land near the future site of the theme park was auctioned off for a whopping 1.19 billion yuan (S$240 million), over 3.5 times the minimum asking price.
The property fever has been gripping Shanghai residents – and scores of affluent investors across China – for several years. In 2006, new apartments in areas like Chuansha were already sporting billboards covered with Mickey Mouse ears and dollar signs to trigger the sales.
However, it was only after Beijing finally gave the green light to Disney that the speculative frenzy sent average prices soaring by as much as 25 percent within a month.
Other fortunate places in recent times include Guangdong and Tianjin, one of the central points of the mega high-speed rail project that was unveiled last year. Beijing is promoting the northern port city as the access to the next frontier of economic growth.
With the advent of Binhai Industrial New Zone in Tianjin, which has drawn major investments like the Sino-Singapore Eco-City, prices of homes in some parts of the once-inactive city have risen by as much as 80 percent in the last two years.
Together with first-tier cities like Shanghai and Beijing, these two cities led the 24 percent hike in average property prices across the country in 2009 even as fears of a bubble grew.
Smaller cities also have a share of the fortune. Chengdu, for example, benefited from the massive reconstruction effort of Beijing after the Sichuan earthquake in 2008. Xiamen was recognized as the new centre for cross-strait commerce with Taiwan in 2009.
According to some analysts, Beijing’s “magic words” alone did not spur the double-digit price increase. Some of the other factors include speculation, economic growth, demand for marriage homes financed by couples’ parents and a growing number of affluent urbanites.
Still, “hyped-up expectations that state-driven projects are bound to take off in a big way do help to push up sales significantly”, noted Sherry Li, a Shanghai-based property consultant, who assists Chinese investors explore for such investments.
However Ms. Li also said that such hype sometimes falls flat. “Take Dalian. It attracted a lot of attention a few years ago when there were big plans to make it a tourism and oil refining centre. Prices jumped 20 to 30 per cent and then flopped after that,” she said.
“I don’t think the Hainan craziness will last that long either.”