Hainan Island, China - Property Prices Skyrocketing as Mainland Speculators Descend Upon the Island

The January 29th edition of China Daily features a front page story on skyrocketing real estate prices here on Hainan Island. Just in the past month, prices here have been driven up from already too high prices an additional 30-100% in a orgiastic buying frenzy which threatens China’s impressive growth and expansion as a country during the past five years. Of course we shouldn’t suggest there is coincidence that the speculators, government and real estate developers are all under the same sheet together enjoying their well-crafted profit party.

This recent development coincidentally occurs in an orchestrated asset dance as during the past month, the Chinese stock indexes began to decline while the Chinese government makes a special proclamation that Hainan will receive special attention and incentives to be developed into an international luxury level destination.

Furthermore, it needs to be understood that during the past year strategic decisions were made to take Hainan Island upmarket as a more exclusive, luxury level tropical island playground for the wealthy and privileged. St. Regis and MGM Grande will join the resort lineup at Yalong Bay. Shangri La, Fairmont and Starwood’s Luxury Collection Malus will flagship the Haitang Bay development. Lu Hui Tou’s Banyan Tree Villas and Intercontinental will be joined by Four Seasons alongside the peninsula’s exclusive golf course and Ban Shan Ban Dao luxury apartment & villa development.

More to the point of today’s China Daily article, we’re all watching in awe and disbelief as mainland speculators fat with two years worth of stock market trading and property flipping profits are descending like a swarm of locusts on China’s only true tropical island destination. In many ways, it does make sense.

Stock Market and Real Estate Speculators Locking in 2009 Profits: Where To Put Their Money Next?

With the Shanghai, Shenzhen and Hong Kong indexes leading the global stock market decline starting two weeks ago, it appears the smart money speculators and insiders are dumping their stocks which have doubled in the past year, bought by the way on borrowed money, taking their profits. The real estate market is no different; with flipping and rolling of their 100% real estate gains in 2009.

Now they’re on the hunt for the most reasonable place to put their money besides a bank account or the declining stock markets of the world and Hainan island property seems the darling destination of the day.

Greed Knows No Bounds Nor Common Sense

The China Daily article even points out that developers are manipulatively suspending sales waiting for the prices to fly higher before allowing anyone to buy.

During the past five years, normal wait times to receive your house key when buying a property on spec (common here) was one year. For most current properties, the wait time to receive the key has stretched to two years. Phase IV at Ban Shan Ban Dao Phase I, II and II located on Lu Hui Tou Peninsula are completely sold out. Phase IV will consist of eight buildings, four of which are now available for deposits to reserve confirmation when units go on sale at an estimated 40,000rmb per square meter according to the sales center representatives. Currently, two thirds of the units have been reserved with deposits, assuming there is no fibbing going on.

My awareness and understanding of the reality of government/big business manipulation of the markets has become so much clearer during the past year that my view of the world has been transformed. I absolutely believe the Chinese DaBoyz know exactly what they are doing, orchestrating an unprecedented grab for power and riches, the mother of all carefully-crafted pump and dumps.

So then what? A good friend suggested the scenario that after they create this asset hyperinflation, then will finally revalue the rmb against the USD sending swarms of cash-laden Chinese to American shores to snap up all the cheap real estate there. We can only wonder the state of the global economy in 2-5 years time.

China Daily: Hainan Property Prices Skyrocketing

As another good friend of mine here often says, “If you want to feel poor, just move to China.”

Information in this article comes from sources believed to be reliable. Mario Cavolo does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. The author may or may not hold positions in issues referred to in this article. No representations are to be taken as advice or recommendation by the author to buy or sell any asset. Copyright ? 2010, Mario Cavolo. All Rights Reserved.