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Hainan Property Guide 27 May 2013

Sources: Hainan provincial government website

Hainan Property GuideLIMI May 2013

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Table of Contents

PART A CITY PROFILE ............................................................ 3 PART B MARKET SEGMENTS ................................................... 7 PART C DEVELOPERS IN HAINAN ........................................ 12 Appendix 1 RECENT POLICIES ..................................................................... 13 Appendix 2 MAP OF FUNCTION GROUPS ...................................................... 15 Appendix 3 TRANSPORTATION OVERVIEW ................................................. 16 Appendix 4 OTHER ECONOMIC AND SOCIAL ISSUES ................................... 17


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PART A CITY PROFILE

1. Overview Hainan. Hainan Province, including the Island of Hainan, the Islands of Sansha and South China Sea, is located at China’s southernmost point. Under its administration, there are three municipalities (Haikou, Sanya and Sansha), six county-level cities, four counties and six minority autonomous counties. The Island of Hainan is separated from mainland China by the Qiongzhou Strait. To the west lies Vietnam, and to the south it faces Indonesia and the Philippines. The Island of Hainan has an area of 33,900 sq km and accounts for 95.8% of the total land area of Hainan Province. Demographics. Prior to 1988, the Island of Hainan was a part of Guangdong Province due to its geographical proximity. The island was separated from Guangdong Province and became Hainan Province in 1988 to spur economic development. At the end of 2011, Hainan’s population was about 9.1 million, accounting for 0.7% of national total population of 1.4 billion. Haikou, the capital city of Hainan, has a population of 2.0 million and the highest population density in Hainan of 888 people per sq km, far exceeding the average figure of 253 in Hainan Province. Sanya, a popular tourist destination, has a population density of 358. The population of Sanya has grown at an average annual rate of 3.58% since 2000, 0.48 ppts higher than that of Haikou and the highest in Hainan Province. This level of growth is expected to be maintained in the coming years as Sanya’s comprehensive tourism infrustructure continues to support sector growth, leading to an increase in employment opportunities. Among other cities, Danzhou (Hainan’s second most populated city as of 2010) and Dongfang saw their populations grow at an annual rate of 1.1% and 1.3% respectively from 2000 to 2010. Exhibit 1: Hainan’s population distribution and population density (2010)

Administration Districts

Population (unit '000)

Land area (sq km)

Population Density (person/sq km)

Total 8,672 34,211 253

Haikou 2,046 2,305 888

Sanya 685 1,915 358

Lingao 428 1,317 325

Wanning 546 1,884 290

Danzhou 932 3,265 286

Qionghai 483 1,693 285

Lingshui 320 1,128 284

Ding'an 285 1,187 240

Chengmai 467 2,045 228

Wenchang 537 2,485 216

Tunchang 257 1,232 209

Dongfang 408 2,256 181

Ledong 459 2,763 166

Changjiang 224 1,610 139

Baoting 147 1,161 126

Wuzhishan 104 1,129 92

Baisha 168 2,117 79

Qiongzhong 174 2,706 64

Sansha Islands 0.44 13 34 Source: 2010 Census


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Geographics. Hainan province is the only tropical province in China. The Island of Hainan is the main island of the province and is on a similar latitude to Hawaii. Temperatures range from 17-29°C during the year because of the tropical monsoon climate, and the coast line spans 1,528 km. The combination of climate and ocean views makes the island an ideal place for tourism. The central part of the island is rather mountainous with 81 mountain peaks above 1,000m in altitude. The island has five national nature reserve areas and over 20 provincial reserve areas. Exhibit 2: Geographical location of Hainan

Source: Google Maps

2. Economic overview GDP. As of 2012, the GDP of Hainan Province was RMB285.5 billion, lower than the national average, while GDP per capita was RMB32,374 representing approximately one-third of the GDP per capita in Shenzhen and Shanghai. Tourism, hospitality, retail, transportation, telecommunication and logistics are the mainstays of Hainan’s economy, with the tertiary industry accountingfor 47% of GDP in 2012. In 2011, the detailed 12th Five-Year Plan for Hainan stated average annual GDP growth from 2011 to 2015 to be around 13%, with local fical revenue growing over 20% each year, fixed asset investment (“FAI”) growing at 23% while consumer prices remained stable. In 2011 and 2012, Hainan recorded GDP growth of 12% and 9%; FAI grew 39% and 36% respectively; and consumer price index rose 6.1% and 3.2% respectively, 0.7 ppts and 0.6 ppts higher than the national figure respectively. Hainan has a flourishing agricultural industry, accounting for nearly a quarter of its GDP. Because of Hainan’s warm climate, the island has over 120 types of fruits, over 4,000 tropical plant species, over 2,500 different herbs and over 800 types of trees suitable for commercial use. Crops with wide plantation area and the highest economic value are rubber, coconut, oil palm, pepper, lemongrass and cocoa.

Exhibit 3: Hainan statistics at a glance (2012) Pop GDP GDP per capita(m) (RMBb) (RMB) (RMBb) (% of GDP) (RMBb) (% of GDP) (RMBb) (% of GDP)

Hainan 8.9 285.5 32,374.0 71.1 24.9% 80.4 28.1% 134.0 46.9%Shenzhen 13.2 1,295.0 98,255.7 0.0 0.0% 573.7 44.3% 721.3 55.7%Shanghai 23.8 2,010.1 84,459.4 12.8 0.6% 791.3 39.4% 1,206.1 60.0%National 1,354.0 51,932.2 38,354.0 5,237.7 10.1% 23,531.9 45.3% 23,162.6 44.6%

Tertiary IndustryCity

Primary Industry Secondary Industry

Source: National Bureau of Statistics


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Exhibit 4: Hainan and national GDP growth Exhibit 5: Hainan and national CPI

Source: National Bureau of Statistics, Wind Disposable income of urban households. Per capita disposable income for Hainan has been lower than the national average for the past 5 years, but a higher YoY growth rate has been observed since 2010. As a result, the disposable income gap between urban households in Hainan and first tier cities has narrowed. Exhibit 6: Per capita disposable income for urban households

RMB YoY Growth RMB YoY Growth RMB YoY Growth

Hainan 12,497.0 9.1% 15,581.0 24.7% 18,368.0 17.9%

Shenzhen 29,244.5 9.4% 32,380.9 10.7% 36,505.0 12.7%

Shanghai 28,838.0 8.1% 31,838.0 10.4% 36,230.0 13.8%

National 17,174.7 8.8% 19,109.4 11.3% 21,809.8 14.1%

City201120102009

Source: National Bureau of Statistics

Macro monetary environment. The overall macro monetary environment appears moderately loose as China’s recovery remains fragile. In 1Q of 2013, China recorded quarterly GDP growth of 7.7%, 0.2% lower QoQ and below market expectation. As the inflation rate dropped to 2.1% in March, well under the the 3.5% target, we believe monetary policy in the near term will focus on driving consumption growth. We believe the overall credit environment will remain loose, and the property market is expected to benefit from the abundant liquidity in the market. 3. Hainan’s strategic position 3.1 International tourism island and shopping centre. In accordance with the “State Development’s Opinion Regarding the Developing Hainan into an Inernational Tourism Island 2010” (“The Plan”), the Island of Hainan is being positioned to become an international tourism hotspot by 2020, due to its pleasant climate and natural scenery. The Plan focuses on building an internationally popular travel destination through accelerated progress of Hainan’s tourism sector and the overall service industry. At the same time, the Plan called for environmental protection and preservation, as well as balanced growth during the process. Building on tourism infrastructure. According to The Plan, by 2020, the Island of Hainan is to have a sophisticated modern service industry; an upgrated international reputation as a desirable travel destination; complete infrustructure for fast and convenient travel between attractions and cities; further opening up of the tourism sector including visa exemption and free flow of capital and resources; optimised attractions with diversity and quality; introduction of tourism management and modernised sales and marketing from corporations with internationally well-known hotel management groups and travel agencies.

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Hainan GDP (LHS) Hainan GDP growth (RHS) National GDP growth (RHS)

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1990 1993 1996 1999 2002 2005 2008 2011

Hainan Inflation Rate National Inflation Rate


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-50%-40%

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Total Retail Amount (LHS) Retail Amount YoY Growth (RHS)

International shopping hub. In March 2011, Hainan started the implementation of an off-shore duty free shopping policy as an effort to boost retail revenue from domestic consumers. The policy took reference from similar policies implemented at Okinawa of Japan and Jeju of South Korea, two tourism islands very similar to Hainan. The most recent policy allows non-local travellers, either Chinese or foreign, who intend to leave the island but travel within China, to purchase duty-free items twice a year with aggregate value no more than RMB8,000 per visit per person. Comments. Since the launch of the duty free shopping policies, total tourist arrivals have recorded stable growth between quarters. There does not appear to have been growth in foreign tourist arrivals, which we believe is mainly due to the sluggish recovery of developed economies (Exhibit 7). Retail revenue in Hainan has seen double-digit growth despite the volatile external environment (Exhibit 8). We expect to see the growth rate pick up in the coming years as it takes some time for Hainan to build up its reputation as a shopping centre and for the duty-free policy to take effect as well.

Exhibit 7: Hainan tourist arrivals Exhibit 8: Hainan retail spending

Source: Bureau of Statistics in Hainan

3.2 Harbour Centre Hainan also targets to become a shipping centre given its favourable geographical location. Waterways provide major channels of transportation in Hainan because of the Qiongzhou Strait and lack of cargo capacity at airports. The island has 24 ports, among which Haikou, Sanya, Basuo and Yangpu are the largest. Hainan's ports are booming due to the increase in large construction projects on the island, increasing demand for the island’s agricultural products from Mainland China and the interaction with Southeast Asian countries. The total volume of freight increased at 10-year CAGR of 18.6% from 2000 to 2011, up 10ppts from the previous decade (CAGR of 8.7% from 1990-2000) and waterway passenger traffic grew at 10-year CAGR of 10.6% from 2000 to 2011 (CAGR 1.9% from 1999-2000) Local government plans show that the development focus at the biggest five ports and Sanya port will be for cruise ships.

3.3 Ecological centre

Hainan aims to become a leading ecological community in China. The project highlights that as ecological health is the foundation of Hainan’s development; environmental protection is a basic necessity. However, infrastructure development (including enhancement of the transportation system) and oil and gas exploration may conflict with the process. There will be challenges for the Hainanese government in balancing economic growth and environmental protection .


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PART B HAINAN PROPERTY MARKET SEGMENTS Hainan society and economy in 1988. Hainan, previously a part of Guangdong Province, became a separate province in 1988. Gross domestic product before the split was RMB5.7 billion and GDP per capita stood at RMB14, 631. Hainan’s economy was dominated by agriculture with 50% of GDP from primary industry, 19% from secondary industry and 31% from service industry. Since the establishment of Hainan Province in 1988, the urban population percentage has increased over 30ppts to account for more than 50% of total population in 2012. Hainan province property bubble. After the separation of Hainan Province, land transfer was allowed while the corresponding regulations were not there. Speculators flooded into Hainan and invested heavily in the real estate market. Financial institutions led by the four major banks lacked risk awareness/management, and speculators could easily secure funding over properties that only exist on paper. The average selling price of properties surged by more than 5 times in 3 years as speculators tried to change hands as quickly as possible before the music ended. However, due to the lack of infrastructure and pillar industries, there was no real demand for real estate in Hainan, which finally led to the burst of the bubble in the property market. The central government released measures to cool the overheated Hainan property market in 1993, which pricked the bubble, leaving 2.3 million sq m of unutilised construction land and 4.5 million sq m of residences. In 1995, the provincial government created Hainan Development Bank, hoping to solve the financial fall out of the bubble. In 1998, the bank was shut down by PBOC because of a run on the bank. Average selling prices of property in Hainan collapsed to the pre-1991 level. Long road to recovery after burst of the bubble. After the bubble burst in 1995, fixed asset investment in Hainan’s residential sector decreased 56% and 53% in 1996 and 1997. FAI climbed back to RMB3.7 billion in 2003, almost ten years after the burst. According to the provincial government, by October 2006, about 98% of the unfinished buildings and unsold inventories had been processed. Concerns over property market recovery. The property market of Hainan has recovered strongly since 2003. Starting from 2007, Hainan’s residential FAI has accounted for more than 10% of the provincial GDP and increased rapidly to the current level of over 30%, far in excess of the national average of 14% (Exhibit 9), raising an alarm signal for the island’s property sector. Hainan’s population as a percentage of national population is stable at around 0.6% while the region’s residential FAI as a percentage of national FAI shows huge volatility, surging from below 0.2% in 1999 to above 1.2% in 2011 (see Exhibit 10). This indicates that the real estate market in Hainan is mainly driven by investment demand outside the province. It is worth noting that Hainan’s residential FAI as a percentage of national real estate FAI reached a peak level in 1995 in line with the peak of the property bubble.

Exhibit 9: Real estate FAI as % of GDP of Hainan vs. national Exhibit 10: Real estate FAI and population of Hainan vs. national Source: National Bureau of Statistics

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Hainan Residential FAI vs. National Hainan Portion of National Pop

0.0%

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1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Hainan Residential FAI as % of GDP National Residential FAI as % of GDP


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Current economy and market different from that of 1990s. Economic fundamentals have changed a lot over the past two decades in Hainan. The province has transformed from an island separated from mainland China, not easily accessible and heavily dependent on agriculture, into one of China’s tourism havens. In 2012, the primary, secondary and service industries accounted for 25%, 28% and 47% of Hainan Province’s GDP respectively. Tourism, replacing agriculture, has become a pillar industry of the province and the spillover effect has boosted other industries as well. Infrastructure has been built up to make Hainan an ideal destination for vacation and retirement life, which leads to increasing real demand from non-local buyers for properties in Hainan. We believe the current property market boom is backed by the economic growth of Hainan and is much healthier than that of 1990s, despite the early signal of overheating. The recent property boom is driven largely by outsiders as shown by Exhibit 11. Average selling price in Hainan recorded a CAGR of 22.0% from 2007 to 2011 (+13.8ppts above national average); while average disposable income of Hainan only experienced a CAGR 13.7%, indicating that locals have become less able to purchase properties in Hainan. Exhibit 12 shows the average price of a 100 sq m home vs Hainan’s average annual disposable income; the ratio has risen to above that of Shanghai, which is known for its high property price averaging RMB 13,566 per sq m by end 2012. Moreover, there is an increasing gap between the price-to-income ratio in Hainan and national average, indicating a low affordability ratio.

Exhibit 11: Disposable income and ASP of Hainan vs. national Exhibit 12: Price of 100 sq m home to annual income

Source: National Bureau of Statistics Hainan property market in relation to market liquidity. Hainan’s property market attracts outside investors for its unique location, warm weather and natural environment. Thus, money supply and loan growth should serve as good indicators of average property price in Hainan (Exhibit 13& 14). Also, Hainan’s property sector received stimulus from a sudden injection of a number of new projects in 2006 and 2008, and government is planning in 2010 to build Hainan into an international tourism hotspot. As inflation is well under control, we believe the money supply will not be tightened in the near future given the fragile economic recovery. Thus price pressure will be limited.

Exhibit 13: ASP in Hainan and M2 money supply growth Exhibit 14: Loan, loan growth and Required Reserve Ratio Source: PBOC, National Bureau of Statistics

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Hainan ASP (LHS) Shanghai ASP (LHS) Quarterly M2 YoY growth (RHS)


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Construction area growth Sales amount growth

Market outlook. Exhibit 15 shows that average selling price of Hainan properties in a year is followed by change in real estate construction with a one-year lag as developers initiate more projects as property prices increase. With average selling prices on the rise since November 2012 (Exhibit 16), we believe developers may start increasing their project pipelines in Hainan and the GFA under construction may see a recovery in growth in 1H14. With robust demand and lower inventory levels after a drop in GFA under construction since 2010, we believe average selling price is likely to show a rebound in 2013, having decreased 18% in 2012.

Exhibit 15: ASP and GFA under construction growth in Hainan Exhibit 16: GFA sold and ASP in Hainan

Source: Bureau of Statistics in Hainan

After the announcement of the “National 5 Measures” to curb ASP growth nationwide, provinces are required to announce detailed plans for local level implementation. However, Hainan has refused to adopt the new plan and will instead keep to the original curbing measures they had. We believe this shows the local government’s strong intention to protect the property market of Hainan and also indicates that there is little room for further tightening policies in Hainan.

Cost analysis. Exhibit 17 shows from 1996 to 2011, total real estate revenue had grown at a CAGR of 37.4% while cost had grown at a CAGR of 31.3%. The continuous decrease in developers’ total cost indicates that their net margin from their exposure to Hainan has been increasing. Exhibit 17: Developers’ total cost as % of total revenue

60%

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1995 1997 1999 2001 2003 2005 2007 2009 2011

Developers' total cost as a percentage of revenue

Source: Wind Datafeed

Construction material. Haikou cement price, as well as the national steel bar price has been continuously decreasing since mid-2011 (see Exhibit 18), in line with the downward trend of developers’ costs as a percentage of total revenue in Hainan. As the cement and steel industry in China is still facing the problem of overcapacity and sluggish economic recovery is not likely to bring down the inventory level in the near term, we believe the cost of construction materials will remain stable or decrease further.


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Exhibit 18: Haikou cement price and national steel bar price

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Source: Wind Datafeed

Residential proerties. The provincial data (Exhibit 19) shows that the newly started GFA for residential properties picked up in 2011 after 2-years of consecutive decrease. However, GFA completed and GFA sold softened in 2011, and ASP was slightly up mainly due to the stringent government policy on the property market. As GFA sold is considerably higher than GFA completed during the past years, we believe the inventory level of Hainan’s residential property market will remain safe and there’s not much pressure coming from the supply side. As is shown in the more recent city-level data (Exhibit 20), residential property transaction volume has been bottoming out since 2012. ASP in Sanya stood at around RMB25, 000/sq m while that of Haikou started to rise after having decreased slowly over the past two years. Since Haikou and Sanya are the two major cities in Hainan, we believe the stable situation in these two markets indicates the overall Hainan residential market has a stable outlook.

Exhibit 19: Residential Newly Start, Completed and Sold GFA Exhibit 20: Residential GFA sold and ASP in Haikou and Sanya

Source: CREIS Source: CREIS

Commercial properties. Since the Island of Hainan has a tourism dominated economy, hotels comprise a large share of commercial properties in Hainan. Since 2004, Hainan hotel sector has seen a CAGR of 25% in total revenue. The first five-star hotel started operation in 1995 and currently there are more than 200 hotels in Hainan, of which 22 are five-star hotels. Despite the surge in hotel supply, occupation rates have seen a continuous upward trend (even during the financial crises), which indicates the strong demand on the back of Hainan’s booming tourism industry. As is mentioned previously, Hainan is positioning itself to become a shopping hub, which provides a good opportunity in its commercial property development. As shown in Exhibit 22, the commercial property GFA sold has increased significantly starting from 2010, accompanied by the rising average selling price. The rising price of commercial properties has also led to increasing supply as is shown is Exhibit 23, while newly commenced GFA of commercial


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property is increasing rapidly. As GFA sold is lower than GFA completed since 2008, we expect an upward trend for the inventory levels in 2013 and beyond, while ASPs remain stable due to the increasing demand.

Exhibit 21: Hainan hotel revenue and occupancy rate Exhibit 22: Hainan commercial property GFA sold and ASP Source: Bureau of Statistics in Hainan Source: Wind Datafeed

Note: 2013 data only consist of January data

Exhibit 23: Commercial property GFA

‘ Source: CREIS

PART C DEVELOPERS IN HAINAN

There are several Hong Kong listed developers that have a footprint in Hainan due to its unique natural endowment and the huge growth potential. There are also a lot of unlisted local developers in Hainan, among which Hainan Airlines Real Estate has the largest land reserve in the province. Recommendations. Of the companies below, we favour Guangzhou R&F. The Company is a major listed Guangzhou developer with around 40% of its landbank in the Pearl River Delta region, of which 11% is in Hainan as at end-2012. Most of its land bank is located in Chengmai, Lingshui, Lingao and Wenchang, which are all along coastal areas and adjacent to Haikou and Sanya. We believe the convenient transportation system and overcrowding in Haikou and Sanya will contribute to higher growth in neighbouring cities. Considering R&F has been in Hainan’s residential property market since 2006, we believe the company is able to capture investor demand for high-quality residences for vacation and retirement. R&F’s previous Hainan projects were well received by the market, especially the smaller-sized apartments. R&F plans to launch 120,000 sq m of residential property in the second half of 2013 and we believe R&F will maintain its good sales performance in Hainan amid the stable market outlook. .

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Hainan Hotel Revenue Hainan Hotel Occupancy Rate

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R&F is also experienced in property investment. It plans to launch a five-star hotel operated by Hilton with 300 rooms in Chengmai city, next to its previously lauched R&F Mangrove Bay residential projects.Given the improving occupancy rate in Hainan, we believe the hotel business will provide stable and growing cash flow to R&F. Overall, we believe R&F is well positioned to capture the growth opportunity in Hainan with diversed landbank.

Exhibit 24: Major HK listed developers’ land bank in Hainan (as of end 2012)

Listed Developers Ticker

Hainan landbank ('000 sq m)

Total PRC landbank ('000 sq m)

% of total PRC landbank

1 Citic Pacific 267. HK 1578.0 3,358 47.0%2 R&F 2777.HK 3016.0 27,420 11.0%3 CR Land 1109.HK 959.8 29,360 3.3%4 Agile 3380.HK 450.1 34,920 1.3%5 Shimao 813.HK 315.1 36,220 0.9%6 Yuexiu 123.HK 98.0 14,400 0.7%

Sources: Company Data


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Appendix 1 RECENT POLICIES Exhibit 25: Recent policies on Hainan property market

Date Authorities Measures May 2010

Hainan Land Use Bureau

Landowners in Hainan will be fined 20% of the total price of any land that has not been used for more than one year. The government will confiscate land that has lain idle for more than two years

September 2010

Hainan Provincial Government

1. No less than 70% of residential land should be used for government subsidised housing and small to medium residential housing.

2. The sales price land auction/tender cannot be lower than 70% of the benchmark price, and the winner cannot make a deposit of less than 20% of the land price.

3. Developers with idle land bank who fail to pay the land premium will be prohibited from joining land auctions/tenders for a designated period of time.

4. After land sales, developers have to sign contracts within 10 days and pay 50% of the sales price within one month as the first installment.

5. With effect from 1 April 2010, all developers must submit the details of land use, including dates of proposed commencement and completion, to the local land ministry. All users who cannot deliver on time will have to apply for a postponement 15 days before date of commencement or completion. Developers falling to apply through the system will be prohibited from joining land auctions/tenders for one year.

6. Build a credit system for developers. Those who violate the rules and who do not pay land premium will be flagged as a reference for future land tenders

February 2011

Ministry of Housing and Urban-Rural Development in Hainan

1. Prohibit property sales to local households who current hold two or more properties. 2. Non-local residents can purchase only one property.

March 2010

Hainan Municipal Government

Percentage increase in average property price per sq m should not exceed increase in average city resident disposable income for the year.

July 2011

People’s Bank of China

Increase benchmark interest rate for both deposit and loan by 0.25 ppt. All deposit and loan interest rate should adjust accordingly.

May 2011

Ministry of Land and Resources

“National Land Utilization Plan 2011” listed target for 10 million units of public subsidized housing and increase land supply for public housing and small-to-medium sized properties.

September 2011

Ministry of Finance

Student housing and cafeteria under colleges and universities are exempt from stamp duties and property taxes.

December 2011


Official extended the policy that limits number of property purchases indefinitely.

February 2012


1. Ownership-style hotel can be built on land for commercial, residential and financial. Planning, designing, construction and internal decoration should follow standards not lower than three-star hotels. Matching service facilities should account more than 16% of total planned GFA.

2. Corporations or individuals who purchase ownership-style hotel units are the lawful owners of the units they have acquired. Corporations or individuals who develop ownership-style hotels and matching facilities are the lawful owners of the hotels they have developed. Owner of a hotel cannot sell or transfer their part of the ownership or put it up as collateral.

3. Ownership-style hotels should be properly identified when being approved by government branches and being pre-sold. Units or suites of ownership-style hotels cannot be sold or pre-sold according to gross floor area.

April 2012

China Banking Regulatory Commission

Down payments for second home buyers are to be raised to 60%, while those for first time buyers of homes larger than 90 sq m will rise to at least 30%, up from 20%. Mortgage rates for second home buyers will be increased to 1.1x of the current benchmark 6.55% (7.21%)

May 2012

Provisions regarding boosting number of company headquarters in Haikou

Provisions designed to attract more companies to set headquarters at Haikou with incentives on office building, tax breaks and personal income tax cut on corporate executives.

July 2012

Hainan Province Highway Development Plan

The document introduced plans to build 1,102 km of highway to connect major scenic attractions, resorts and enhance region’s tourism.


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for Tourism August 2012


The office announced to build 100 city parks by year end and speed up province-wide city infrastructure construction. The announcement also mentioned the office’s intention to keep healthy growth in property market.

June 2012

Sanya property information system delayed

Because of technical difficulties, Sanya’s property information system project failed to start operation by the end of June and did not announce a detailed schedule.

April 2013


Refused to issue a local version of the “Five Policies Measure” to further suppress local property market.

Sources: Various local and central government websites

Exhibit 26: 2010-2020 Hainan international tourism island development planning outline

1 By 2015, deregulation of tourism management, marketing, service and development, introduce market-driven practices and increase level of internationalisation. By 2020, management and service stardards of tourism facilities should be the same as global standard, finishing the initial stage in making Hainan a world class island resourt and tourism hotspot.

2 By 2015, the target is for tourism and service industry to account for more than 8% and 47% of provincial GDP respectively. The target figures for 2020 are 12% and 60%.

3 Increase effort on developing modern service industry including media, logistics, tourism real estate, tourism insurance and off-shore finance service.

4 Strictly enforce environmental protection laws and regulations; aggresively push for energy saving and emission reduction; and improve pollution prevention and treatment.

5 Develop modern tropical agriculture specialty including tropical fruits, flowers, plants, and seafood. Establish organic production example base and strengthen corporation with Taiwan.

6 Accelerate urban-rural integration progress. Establish various functional area of cities and optimise area planning. Improve cities’ comprehensive service capability to attract businesses and populations and improve cities’ overall strength.

7 Increase infrustructure construction in transportation, renewable technology and internet equipment.

8 Develop industries in Hainan such as auto, luxury good manufacturing, medical research, information technology and marine economy with focus on minimum environmental impact.

9 Finland, Denmark, Norway, Ukraine and Kazakahstan were added to Visa-free policy so that tourists from 26 countries do not need a visa to go to Hainan.

Source: Hainan provincial government


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Appendix 2 MAP OF SIX FUNCTION GROUPS Exhibit 27: Map of six function groups in Hainan

Source: Hainan Provincial Government

Northern Group Centered around Haikou, the northern group will focus developing effort on sectors such as cultral and media, conferences and exhibitions, commercial retailing, financial and insurance, education and training, real estate, auto manufacturing, pharmaceuticals, and food processing. Eastern Group Qionghai and Wanning should expand coast tourism, tropical agriculture, processing and fishing. Bo’ao has become a desired destination for international conferences. Southern Group Centered around Sanya, the southern group focuses on hospitality, entertainment, rehabilitation, commerical retailing. Further build Sanya as a scenic attraction and ultimately make Sanya a world famous coast tropical resort. Western Group The western part of the island should rely on Yangpu economic development zone and develop harbour industry and technology intensive industries. Build Danzhou into the central city in western part of the island. Central Group While balancing economic development and environment preservation, develop tropical agriculture, forestry, ecology tourism and ethnic culture tourism. Ocean Group The ocean group is comprised of Xisha, Nansha and Zhongsha islands. The region should solidify position in fishing and transportation; expand exploring, extraction and processing of off-shore oil and gas resources.


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Appendix 3 TRANSPORTATION OVERVIEW

Highway. Total mileage for highways in the Island of Hainan is over 17,000 kilometres including a national level highway along the island’s coast, connecting every harbour and major city in Hainan. Currently 318 towns, villages and attractions scattered over the island are accessible through provincial level highways. There is also a circumferential freeway around the island, with a journey time of 3 hours from Haikou to Sanya by east-line freeway, and 4 hours by west-line freeway. The 12th Five-Year plan introduced construction of a 400-km highway costing RMB60 billion, of which the main project is a national level highway directly connecting the island’s west and east.

Railway. There are five railway routes, connecting Hainan with Xi’an (north-west), Shanghai (east coast), Beijing (north), Chengdu (south-west), Changsha (central), all of which are amongst the nation’s largest transportation hubs. The high-speed train from Haikou to other cities started operations in 2011. The journey from Haikou to Sanya is 308km and takes 2hrs. Other stations include Haikou East, Meilan Airport, Wenchang, Qionghai, Boao, Wanning, Lingshui and Yalongwan.

Qiongzhou Strait Bridge. As of now, all vehicles and trains travelling from the mainland to Hainan enter by ferry across the Qiongzhou Strait. The trip takes over 90 minutes each way. Plans to construct a bridge across the strait were introduced in the 12th Five-Year Plan. The project is still in planning stage due to be initiated in 2015 and completed by 2020.Once finished it will cut the crossing time down to 20 minutes and 10 minutes for vehicles and trains to reach the other side.

Waterway. The island has 24 ports, among which Haikou, Sanya, Basuo and Yangpu are the largest. Total port throughput has increased significantly and local government plans show a focus on ports at Yangpu, Haikou, Basuo and Sanya. Sanya port will be for cruise ships.

Air travel. Haikou Melan Airport and Sanya Phoenix Airport, the only two airports in Hainan province, are expanding their capacity from annual combined throughput of 20 million passengers to 50 million annually. Both airports are operating at over 100% designed capacity. Haikou and Sanya are expected to complete airport expansion projects by the end of 2017 and 2013, respectively. Boao International Airport is expected to begin operation by the end of 2015 with passenger throughput at 0.5 million annually and cargo throughput around 1,400MT. Danzhou Airport, located at western part of the island is now in early investigation stage.

Exhibit 28: Hainan transportation system

Source: Hainan Tourism Board


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Appendix 4 OTHER ECONOMIC AND SOCIAL ISSUES Oil and gas resources. Hainan and its surrounding seas are rich in oil and gas resoruces and its total reserve of natural gas ranks second in China, only next to Xinjinag. 5.52 billion MT of oil and 12 trillion cubic metres of natural gas have been discovered in the three Cenozoic sedimentary basins around the Island of Hainan. In 2011, CNOOC invested RMB6.5 billion in Hainan for the Yangpu LNG project, which is composed of terminal and trunkline project. The designed capacity for Phase I is 2MMT per annum (“mtpa”), with 2 LNG tanks each with a capacity of 160,000 cubic metres. A berth that can accommodate 80,000 – 267,000 cubic metre LNG tankers will be built inside the terminal harbor. The first phase is expected to be completed in the early of 2014. The designed capacity for Phase II is 3 mtpa and expected to be completed between 2017 and 2020. Illegal industry. Hainan used to be a haven for smuggling, prostitution and gambling, but the police force has been strengthend in order to block these illegal industries and enhance social security in Hainan.


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Download - Hainan Property Guide 27 May 2013 - platinum-asia.com · Hainan Property Guide 27 May 2013 Sources: Hainan provincial government website. ... Hainan province is the only tropical

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