Hainan Island: The "Hawaii Of China" Looks To Attract More Tourists, Property Buyers In 2010

    With its palm trees, five-star resorts, beaches and hordes of tourists swathed in garish tropical attire, Hainan's nickname isn't much of an exaggeration.
    Jing DailyAuthor
      Published   in Finance

    The Ongoing Luxury Makeover In Sanya And Elsewhere Draws Tourists, Buyers Turned Off By Exorbitant Real Estate Prices In Shanghai And Beijing#

    Hainan, China's southernmost province, is often referred to as the "Hawaii of China." With its palm trees, five-star resorts, beaches and hordes of tourists swathed in garish tropical attire, this nickname isn't much of an exaggeration. Over the past decade or so, however, Hainan officials have looked to boost the island's visibility both to tour operators and real estate developers, and have (like Macau) sought to diversify the island's economy through an emphasis on MICE (Meetings, Incentives, Conferences and Events), development of the island's golf infrastructure, and far-ranging projects like the construction of shopping malls. In a recent interview, Liu Kaiqiang, the director of the Sanya Tourism Association, shed some light on some of the top priorities for tourism and government officials in Sanya -- Hainan's second-most populous city:

    Sanya needs to continue raise the world-wide influence and awareness of the destination, and it needs to publicize the positioning of Sanya as a recognized international coastal resort destination.

    The level and quality of hotel hardware in Sanya is close to, or even superior to other well-known coastal resorts around the world. However, the overall tourism blueprint lacks theme parks, leisure-oriented entertainment places and shopping malls.


    Sanya is going to focus on accelerating the pace of building an international tourism island, actively push the construction of high-end leisure products e.g. high-end resorts, luxury cruise sightseeing, and duty-free shopping malls. Sanya is targeted to become one of the first-choice world-wide coastal destinations in the near future.

    Sanya, and by extension Hainan as a whole, has come a long way in terms of becoming a major resort hub. Since 1999, when the first international resort opened, major hotel chains like the Ritz-Carlton, Kempinski, and -- most recently -- the Mandarin Oriental have opened locations in Sanya. In the year ahead, powered mainly by growth in mainland Chinese tourism, Sanya and other Hainan hotspots are expected to see even more investment and construction of new resorts. From SanyaExpat:

    This expectation of continued growth and infrastructure expansion in the Pacific Rim certainly includes development in and around Sanya & Hainan Island. More so, we are seeing clear evidence of Sanya going upmarket, another indicator of the incredible wealth being created here. Haitang Bay is loaded with world-class luxury brands as well as St. Regis coming to Yalong Bay, and the Intercontinental soon to open, joining luxury villa Banyan Tree Resort on the Lu Hui Tou Peninsula.

    Though international visitors are a major part of Hainan's broader promotional plan, Hainan -- and Beijing -- officials hope to help the island appeal to more mainland Chinese tourists as well. As a Xinhua article today pointed out, government officials said this week that they hope to turn Hainan into a top international tourism destination by 2020. From the article:

    The government said it would maintain the healthy development of the island's property sector and encourage developers to build premium hotels and resorts. It also supports family-run hotels and property-rental services.

    Efforts should also go to the financial sector in the island by pushing forward the trial program of cross-border trade RMB settlement and backing qualified tourism firms to get listed in the stock market.

    The plan also includes measures to promote modern tropical agriculture in Hainan, including tropical fruits, aquatic products and others, and expand its agricultural cooperation with Taiwan.

    The government will further extend its favorable visa-free policy to five other nations including Finland, Denmark, Norway, Ukraine and Kazakhstan from the previous 21 nations including the United States, Japan and Canada.

    All of these planned measures to boost international and domestic tourism and build Hainan infrastructure sound great, but what kinds of concrete changes can we expect to see actually happening in Hainan this year? Along with the construction of the aforementioned resorts, a recent China Radio International article forecast a huge amount of real estate investment (which worries some residents who remember the Hainan property bubble of the early 1990s), as more mainland Chinese invest in property in Hainan rather than top-tier cities like Beijing or Shanghai, where real estate prices have in some cases more than doubled in the last year.

    The CRI article, echoing Xinhua's commentary, also gives indications that the expanded visa-free policy expected to go through sometime this year should attract more western tourists:

    The local authorities want to turn the province, which boasts lavish sub-tropical sunshine and beaches, into an international tourism paradise, with the offering of a visa-free policy for overseas visitors and duty-free shopping venues for Chinese citizens. Li Baiqing, vice major of Sanya, the island's top tourism destination, told China Daily the plan has been submitted to the State Council for approval and will hopefully be passed early this year.
    Many early birds have begun betting on its future, creating a boom in both investment in and consumption of local property.

    Industry insiders estimate that more than 100 property developers from all over the country have entered the province, with their total investment exceeding 100 billion yuan so far.

    According to the National Bureau of Statistics, real estate investment accounted for 31 percent of Hainan's fixed asset investment in the first three quarters of 2009, much higher than the country's average of 20 percent. The investment into Hainan's residential sector jumped by 58.5 percent year-on-year to 20 billion yuan, with the growth rate ranking second in the country.

    Hainan will definitely be a place to watch in 2010. Whether the island's so-called "makeover" leads to its elevation as one of the world's top international travel destinations or if over-speculation in the property sector causes its economy to sputter once again will likely depend on whether officials can adequately balance all of their ambitions. By fostering more regular and large-scale MICE, encouraging the construction of more entertainment and shopping venues (following the lead of Macau), and investing heavily on mainland China and overseas tourism marketing, hopefully Hainan could, indeed, offer visitors the same diverse services as its "nickname-sake," Hawaii.

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