Hainan's clean air lures homebuyers

Zoe Zhang, a 38-year-old housewife from Shanghai, plans to spend as much as two million yuan (HK$2.5 million) to breathe a little clean air.

Since December, Zhang has been shopping for a home in Sanya on Hainan, a tropical island in the South China Sea that has been compared to Hawaii because of its sandy beaches and balmy weather. It also has some of China's cleanest air.

"Air quality has never been so bad in Shanghai," Zhang said. "I simply want to have a place in Sanya for my baby and parents to fly down and stay during those heavily polluted days."

China's smog-clogged cities, where pollution regularly exceeds World Health Organisation levels considered safe, are proving a boon for Sanya, lifting home prices that slumped more than 60 per cent in 2011.

"A lot of buyers from the mainland need to spend winter here and clear out their lungs," said Fu Zelong, a researcher at Centaline in Haikou, the provincial capital and biggest city on Hainan. "There used to be a lot of speculative money in Sanya's property market, but what's driving the market today is real demand for holiday homes."

More than 80 per cent of property agent Wei Yongfeng's clients last year said they bought homes in the city for its clean air. Most were buying second or third properties outside their home cities, said Wei, who works for Verdure International, a Nanjing-based developer.

Sanya was the mainland's best-performing property market in 2010, with prices jumping 48 per cent thanks to a two-year lending binge spurred by government plans to transform Hainan into a tourism destination.

That came to a halt the following year, sending values down 66 per cent, after the mainland government tightened property policies to weed out speculators.

Now prices are stabilising. They climbed 4.5 per cent in January from a year earlier to 25,046 yuan per square metre, according to SouFun Holdings, China's biggest real estate website. That compared with an 11 per cent decline in the same period last year.

Air quality in Haikou was the third best among 74 cities the government tracked in January, while Beijing ranked 39th and Shanghai 12th, according to China National Environment Monitoring Centre. Sanya, excluded from the environment ministry's survey, reported just one "slightly polluted" day in the fourth quarter, while Beijing's residents suffered 189 days of polluted or heavily polluted air last year, according to the cities' authorities.

The government unveiled a plan in December 2009 to build Hainan into an international tourism centre, luring hotel chains such as Starwood Hotels & Resorts and Marriott International, which now line Yalong Bay to Sanya's east.

Zhang said she is looking for a 1,076 square feet, two-bedroom holiday home in the tropical city, a three-hour flight from Shanghai. She plans to rent the place out when her family is not staying there.

The mainland's pace of economic growth is slowing. Gross domestic product will expand 7.5 per cent this year, the least since 1990.

That may jeopardise the recovery in Sanya's property market, which rebounded as property prices around the mainland jumped last year.