Soon after the government declared Hainan to be an "international tourism island," housing prices doubled and even tripled, particularly in Sanya, a tourist hotspot at the southern tip of Hainan Island.  
As China is developing and more people are having larger disposable incomes, mainlanders – particularly those from the northeast where the winters are long and harsh – are spending more time on the tourist island of Hainan.  While this is good for developing Hainan’s tourism industry, it is also creating a huge gap in the island’s housing supply and demand. With so many vacationers coming to spend about 2-3 months in Hainan every year, the island finds its real estate demand to be much larger than its 8.6 million residents.
Zheng Songshan has lived in Hainan for about 20 years now. Although he is a government official, he can’t even afford a house himself. He says that soon after the government declared Hainan to be an "international tourism island," housing prices doubled and even tripled, particularly in Sanya, a tourist hotspot at the southern tip of the island.
"The average housing price per square meter is about 5,000-6,000 yuan. But in Sanya, housing prices are about 20,000 yuan per square meter," he says. "The average person can’t afford it."
The issue is a double-edged sword. With Caribbean-blue water, green rainforests and clear skies, Hainan officials believe the island’s dream of becoming a worldwide tourist destination is just within reach. Envisioning the future economic benefits of attracting high-end tourists and companies, Vice Governor of Hainan Jiang Sixian says the island is "willing to endure whatever the hardships that accompany this mission."
Hainan residents are very aware that the island’s development and success depends on outsiders. With modern roads and newly built railways, the infrastructure of Hainan is just one area that has prospered from investments catering to attract high-end tourism capital. Chairman of Vantone Real Estate Feng Lun believes Hainan is a special case because its real estate market depends so strongly on one industry. "Hainan’s real estate industry relies heavily on external development and people outside of Hainan. We benefit from the general economic growth in China," he said. Feng believes that striking a balance between tourists wanting to buy their second and third homes and keeping a realistic check on land prices both now and in the future is the key.
High-end developments such as golf courses, five-star resort hotels and villas are now budding and helping to spread the word about Hainan’s growing tourism industry. But as the industry takes off and the island continues to gain international popularity, the situation will no doubt only worsen. Jiang says the Hainan government has taken measures to stop the over-priced housing market, including placing a temporary ban on real estate projects and land transfers. This year, the provincial government plans to build about 10,000 government-subsidized houses, helping about one-eighth of the island’s residents.
Zheng says although these houses are lower quality than the high-end development that’s also taking place on the island, many residents appreciate the efforts being made and understand the delicate tourism-real estate relationship. "Even if high-end houses are mostly bought by people on the mainland, if every family in Hainan owns their own house, then everybody will be pleased."
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