Hainan restricts property ownership options for non-locals, after throwing doors open to visa-free entry

Beijing imposed restrictions on the purchase of property in Hainan on Sunday night, about a week after it announced an ambitious free-trade zone plan for the island, which is also known as “China’s Hawaii”.

In a move that suggests zero tolerance for speculation, the provincial government has stipulated that non-locals cannot buy homes in Hainan unless they can provide official proof that they have paid the local social security fund for 24 months. In the hotspot cities of Haikou, Sanya and Qionghai, buyers must prove they have paid social security for 60 months. In the central mountainous region, non-local buyers are banned altogether. 

“Province-wide home purchase restrictions did not existent before. All previous bans applied to cities. This underscores the seriousness of the government’s message – any form of speculation is not allowed,” said Yan Yuejin, an analyst with the E-house China R&D Institute.

The restrictions update a March 31 rule that allowed non-locals to buy one apartment. The new rules also stipulate that non-locals cannot borrow more than 30 per cent of the value of a property from banks, and after purchase the homes cannot be sold within five years. 

Most stocks related to Hainan soared on the news last Monday that the province had been chosen as a free-trade zone to celebrate its 30 years as a special economic zone. Agile Group Holdings, a developer with high exposure to Hainan, rallied by 3.9 per cent last Monday.