Explainer | Why Ocean Flower Island – dubbed ‘Dubai of China’ – is important to China Evergrande Group and Hainan province

Ocean Flower Island is the world’s largest man-made tourism island
The island has attracted more than 5.5 million tourists since January 1 2021

China property

Xinlu Liangin Beijing

Published: 5:37pm, 4 Jan 2022

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China Evergrande Group, the world’s most indebted developer, was last week ordered to demolish 39 buildings on Ocean Flower Island, a project comprising three man-made islands developed by the company in China’s southern Hainan province, within 10 days.

The order, issued by the Danzhou Municipal People’s Government on December 30, states that an illegally obtained permit for the buildings had been revoked and that the buildings now needed to be dismantled, according to media reports.

Here is what you need to know about the project:

What is Ocean Flower Island?

Ocean Flower Island, known as “Haihua” in Chinese, is an enormous artificial island off the north coast of Danzhou, in Hainan province. Fully opened in late 2020, the controversial project is the world’s largest man-made tourism island, covering about 800 hectares (1,980 acres) – or 1.5 times bigger than Dubai’s Palm Island. This has earned it the nickname “Dubai of China”.

Why is the project important?

Ocean Flower is made up of three independent, flower-shaped islets. Of these, Ocean Flower Island No. 1 complex was designed as a one-stop international holiday destination. It has 28 major business hubs that include an international conference and exhibition centre, as well as a museum complex, a fairy-tale world, a water park, a botanic garden, a wedding manor, hot springs and an international shopping plaza.

The project was listed by the Hainan provincial government as the top tourism project in the province’s western part during the 13th Five-Year Plan period between 2016 and 2020. The government said it conformed with the strategy “to develop Hainan into an international tourism island and will greatly enhance the image and quality of coastal tourism in Hainan province”.

The No. 1 complex was planned as a “super pivot” in the western part of the Hainan Pilot Free Trade Zone. Since January 1 last year, the island has attracted more than 5.5 million tourists, including 200,000 during the National Day holiday.

Is Ocean Flower only a tourism centre?

The project’s No. 2 and No. 3 complexes are residential areas. According to a construction plan published by the Danzhou government in December 2019, the maximum total population of the three artificial islands was estimated at 204,900, while their permanent population was estimated at 115,800.

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What is China Evergrande’s role?

The developer initiated the Ocean Flower project in 2012 after it acquired a permit from the Danzhou government to develop the area in 2010.

From 2012 to 2013, the company obtained all the relevant permits to develop the site from the State Oceanic Administration, and started building the project in 2015.

What action has the government taken?

The same year, the Hainan provincial government started investigating and addressing breaches of laws and regulations related to Ocean Flower Island, and imposed administrative fines of 215 million yuan on China Evergrande.

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Last November, the provincial government announced it had withdrawn sale permits for 39 blocks on the project’s No. 2 complex. This affected 2,716 residential homes and 123 shops. The government also said it had terminated sales contracts for 328 units. The 39 buildings have a gross floor area of 434,941 square metres, according to the government order.

Initially, the government had said that all 39 buildings would be used as hotels, offices, a dormitory and to provide affordable homes for “talent”. But on December 30 it said these buildings will be demolished.

What has been China Evergrande’s response?

In a letter to owners of homes in the buildings published on Monday evening, China Evergrande said that “the company will proactively communicate and handle the case in accordance with the demolition order from the local government in Hainan”. It added that the tear-down order does not affect the remainder of the development, where 60,567 apartments have been delivered to buyers, with 628 units on their way.

“The Ocean Flower Island project is a major project in Evergrande Group’s investment and development in Hainan,” the company said, adding that it would “actively communicate with authority in accordance with the guidance of the order and resolve the issue properly”.

The company said in the letter that it had invested about 81 billion yuan (US$12.7 billion) in Ocean Flower Island and built more than 600,000 homes over six years of developing the project.

The project under construction in December 2017. Photo: WEIBO

Evergrande also took note of environmental protection concerns and said it was “unswervingly, uncompromisingly and actively rectifying” marine ecology in accordance with the requirements of environmental authorities and marine inspectors.