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Urban planning

Property buyers spurned but share investors rewarded at Xi’s new ‘dream city’

At least seven detained, sales offices and property agencies closed to stabilise proposed new area’s housing market

PUBLISHED : Wednesday, 05 April, 2017, 3:36pm
UPDATED : Wednesday, 05 April, 2017, 10:03pm

At least seven people have been detained, 71 sales offices for property projects closed, and 35 real estate agency shops shut down in the region of the Xiongan New Area in the last four days to clamp down on property speculation.

Meanwhile, more than 40 stocks based in the zone or nearby regions jumped by the daily 10 per cent limit on the A-share markets on Wednesday morning, amid expectations of government stimulus to build up the new district, which was envisioned by Chinese President Xi Jinping as the future model of China’s development.

Property, cement, energy and port companies in the northern provinces led the gains, on the first trading day after Chinese authorities on Saturday unexpectedly unveiled the plan to build a new economic zone only about 120km south of Beijing.

Shares of Shanghai-listed property developer China Fortune Land Development, which has land holdings in Xiongan, rose by the 10 per cent limit to 29.99 yuan, their highest level since January 2016.

Beijing-based cement maker BBMG Corp also saw its A shares close 10 per cent higher at 5.1 yuan on Wednesday, following a 35 per cent surge of its Hong Kong shares on Monday. Tangshan Jidong Cement and Tianjin Port also hit the daily price rise ceiling.

At the same time, the local authorities are trying hard to fend off property speculators.

China’s sudden announcement on Saturday that it was creating a new economic district in the backwater zone of Hebei to rival Shenzhen and Shanghai’s Pudong kindled investment enthusiasm for property in the area.

A visit by the South China Morning Post earlier this week found the county of Xiong, the heartland in the designated new zone, crowded with potential investors.

According to the hebnews.cn portal run by the Hebei government, the local authority has frozen all property transactions in the county, known as Xiongxian in Chinese.

It would also crack down on any irregular house trading activities to ensure a stable and orderly property market, according to the report.

The report said 765 cases involving house transactions in the region were put under review and 125 “illegal” constructions were torn down. About 1,600 advertisements for houses were removed.

What happens to a Chinese backwater when it becomes the centre of Xi Jinping’s futuristic dream city?

The local government would maintain “high pressure” against irregular house trading, illegal building and speculation. Any violations would be dealt with severely, the authorities said.

While the government has made it clear that China’s new district doesn’t welcome property investors, many other details of the zone, hailed by the official Xinhua news agency as China’s thousand-year strategy, remain unknown.

Xu Kuangdi, the chief advisor for the Beijing-Tianjin-Hebei integration, told Xinhua that the Xiongan New area would mainly undertake general functions previously done by Beijing to “effectively relieve the megacity diseases of Beijing” and become “one of the two wings of Beijing” along with Tongzhou, the new site of the Beijing municipal government.

Xi’s new district plan sparks property curbs as speculators swoop on China’s future boom towns

The new district covers the counties of Xiong, Rongcheng and Anxin and is currently a poor, rural area. Xu said it was chosen because of its “low density of population, low level of development and plenty of space for future growth.”

The site is “like a piece of white paper”, Xu was quoted as saying.

The first paragraph of the story has been amended to say the seven people were detained and not arrested as earlier stated.