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Tired of housing bubbles, Hainan tries shift in focus
CHINA'S tropical island of Hainan, famous for booms and busts in housing, has a plan to shift its economy in a different direction.
The local government will "reclaim" or re-zone a swathe of land to industrial use from residential, according to media reports this week citing officials.
Instead of housing, the real estate will be used for ventures such as tourism and high-tech projects.
To get a sense of the scale, the 21 sq km area amounts to more than six times the size of New York's Central Park.
It exceeds all the land Hainan's government sold to developers over the past seven years, according to Bloomberg calculations based on statistics bureau data.
"This policy shift shows that the government is determined that another property frenzy won't happen again," said Zhang Xiaoduan, Cushman & Wakefield's head of research in southern China. "The authorities intend to make better use of land."
Hainan last year rolled out the nation's toughest property curbs, including province-wide home-buying restrictions, to counter a speculative frenzy as Chinese President Xi Jinping pledged to transform the island, bigger than Belgium, into a free-trade zone.
When asked if cutting supply would simply result in increased pressure for price increases, CBRE Group's head of research in China, Sam Xie, did not think so.
"In the foreseeable future, the provincial-wide buying restrictions will keep curbing demand," he said. BLOOMBERG