Caixin
Apr 04, 2017 07:24 PM
ECONOMY

New Economic Zone Drives Home-Price Surge

A man takes photos of a closed sales center of a real estate project in Rongcheng county, Hebei province, on Sunday. The red and gold sign above the door says
A man takes photos of a closed sales center of a real estate project in Rongcheng county, Hebei province, on Sunday. The red and gold sign above the door says "Need more money." Speculators descended on nearby Xiong county, or Xiongxian, on Saturday after the government announced the creation of a "national new area" there. Photo: IC

(Beijing) — The unexpected decision to create the Xiongan New Area, a new economic zone south of Beijing, led to a more than tripling of residential property prices within a day.

The frenzied speculation led the local county government to order an end to property sales on Sunday morning, half a day after the rush began.

The average residential property price in the area, which extends across Xiongxian, or Xiong county, in Hebei province, has increased from 6,000 yuan per square meter to more than 20,000 yuan since the project was announced, according to a local housing agency’s sales manager surnamed Kang.

An army of buyers rushed to buy homes near the site of the economic zone shortly after the official Xinhua News Agency reported the government decision on Saturday evening to launch the Xiongan New Area.

The main road in Xiongxian was heavily congested with incoming traffic after the announcement, forcing local police to man main roads and junctions in a bid to control traffic.

The influx of homebuyers coming from Beijing, Tianjin, and nearby provinces resulted in all hotel rooms in Xiongxian and neighboring counties being fully booked, local hotel owners said.

The frenzied interest led many potential buyers to act quickly to secure properties in Xincheng Park, one of the more-prestigious local developments. This was despite some risky terms from purchase curbs imposed by the local government, such as the need to pay in full with a one-time payment and an unspecified postponement of transfer of ownership.

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“Twenty thousand (yuan)? OK, that’s not expensive! How many do you have now? If you can come with me to notarize the contracts, I will buy everything you have now!” Song Jianlong told a property agent in Xiongxian after he visited an apartment in Xincheng Park.

On Sunday morning, the county government summoned local property agencies and developers to a meeting and ordered a halt to all property transactions in a bid to cool the housing market and stem further speculation.

Several real estate agencies confirmed to Caixin that the market has been frozen and they cannot sell any properties.

The 19th so-called “national new area” is the first such area to be simultaneously endorsed by the Central Committee of the Communist Party of China and the State Council, China’s cabinet.

Xiongxian, about a two-hour drive south of central Beijing, covers 524 square kilometers and has a total population of 610,000. Key local industries include tourism and packaging.

Xinhua said the Xiongan New Area is the first economic zone to be created with the same national significance as the Shenzhen Special Economic Zone and the Shanghai Pudong New Area, the first national new area, which was opened 25 years ago.

Contact Reporter Pan Che (chepan@caixin.com)

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