Country’s major developers drifting in numbers into Olympic host city Zhangjiakou, but sales off to a slow start

Some of China’s top developers have been quietly building their presence in Zhangjiakou, a city 190 kilometres northwest of Beijing, which is due to host the 2022 Winter Olympic Games, together with the capital.

Better known as Kalgan in the West, Zhangjiakou is home to 4.4 million people and historically was a key terminus on the caravan route between Mongolia and Russia, bearing most of the Siberian tea trade.

Before the Winter Olympic Games announcement, few national developers had thought of the city as a prime spot for projects. But that’s all changed.

China Sunac Holdings, the country’s fifth-largest developer by sale, for instance, announced its entry into Zhangjiakou recently with its “Sunac City” project, which is about to open for pre-sales, becoming the latest top national developer looking to cash in on the sparsely-populated prefecture on the Mongolian Plateau.

Country Garden, the largest developer by this year’s sales value, launched its second project this year here in September. And Evergrande, the country’s second-largest, revealed plans for a mega residential and tourism complex in Huailai, an area between Beijing and Zhangjiakou, in 2016, widely

promoting the development on billboards and advertising right across the Chinese capital.

The developers are all certainly hoping Huailai with prosper after a high-speed rail connecting Beijing and Zhangjiakou opens in 2019.

Even China Vanke, a less-acquisitive developer, in September announced a ski resort development plan for Chongli, where many of the outside events at the Games will take place.

All this developer enthusiasm, however, is yet to ignite anything like a property boom in the area, largely due to recent action by China’s regulators to stop speculators moving in by imposing strict home purchase restrictions.

Since late May, non-locals have only been allowed to buy one flat in downtown Huailai and Chongli, meaning now that all major cities around Beijing have imposed purchasing restrictions.

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Zhou Li, an agent with local property agent Home Fun, told South China Morning Post that since the restrictions were introduced transaction volumes have slumped, with prices barely changing or even edged down, depending on specific locations.

Prices of new homes in the areas are about 14,000 to 18,000 yuan per square metre, and secondary homes 12,000 yuan. But it is possible to find bigger properties in the area for under 10,000 yuan per sq m.

“Prices jumped by 2,000 to 3,000 yuan in the wake of the Olympic announcement, but that didn’t last,” she said. “Now prices are no higher than they were then.”

She said she has seen little upward momentum, given the amount of supply available and that not only national developers but more local ones are now trying to get in on the Olympic hype.

She’s hopeful, though, that sales will rebound in the spring, as “the long cold winter always is a low season”.

According to zjk169, a local property website, telephone inquiries received on Zhangjiakou properties slumped 60 per cent in November from the previous month, which it blamed on the onset of winter.

Construction is halted during the winter so no major new supply was created during the period.

In October, Country Garden sold more than 100 units at its project, at an average price of 9,300 yuan per sq m. All the rest of the projects sold less than 100 units, said Xiao Bian, an analyst with zjk169.

He said national developer interest in Zhangjiakou largely lies in their confidence in the strategic importance of the “Beijing rim” concept, which was given a boost by the announcement of President Xi Jinping’s pet project Xiong’an, and the development plans for the integration of the metropolises of Beijing and Tianjin with Hebei province, known collectively by their traditional characters Jing-Jin-Ji.

The 216,000 square kilometre region surrounding the capital is home to more than 100 million people and has a combined gross domestic product of more than 6 trillion yuan, making it the country’s third main economic engine after the Pearl River Delta and Yangtze River Delta.

The hotly anticipated opening of the Beijing-Zhangjiakou high-speed rail is another positive for the area’s future.

“The point is, you have to be here, not lagging behind your competitors,” said Xiao Bian. “Gaining a profit on a project in a short-term, doesn’t matter,” he said.

“They also have to be here because nowadays it’s so difficult to acquire land in Beijing.”