China reins in speculation in new economic zone

The logo of a real estate agency being removed on Monday after the government clamped down on property speculation in Xiongan New Area. More than 70 sales offices for property projects were closed and 35 real estate agency outlets shut down.
The logo of a real estate agency being removed on Monday after the government clamped down on property speculation in Xiongan New Area. More than 70 sales offices for property projects were closed and 35 real estate agency outlets shut down.PHOTO: REUTERS

SHIJIAZHUANG • At least seven people have been arrested, more than 70 sales offices for property projects closed, and 35 real estate agency shops shut down in a new economic zone near Beijing.

More than 100 "illegal" constructions were torn down. About 1,600 advertisements for houses were also removed, reported local media.

The Chinese authorities have clamped down on property speculation in Xiongan New Area since Beijing announced plans last Saturday to develop the area into a new economic zone similar to those in Shenzhen and Shanghai.

Located some 100km south-west of downtown Beijing, the new district is currently 100 sq km but will eventually be expanded to 2,000 sq km.

"After news of the Xiongan area became public, the behaviour and hype of speculators pushed housing prices to a new high," said the preparatory committee for Xiongan New Area in a statement yesterday.

By Tuesday, the committee had discovered 765 real estate violations, according to the statement carried in the official Xinhua news agency.

Within hours of the news, investors from all over the country descended on Xiongan, causing average apartment prices to nearly double in a day.

Home prices in one area increased from around 4,000 yuan (S$812) per sq m to highs of 20,000 yuan, financial magazine Caixin reported.

"We people here had never in our lifetimes seen anyone buying houses like this. They were pulling out hundreds of thousands, millions in cash without even blinking," one local Xiongan resident told the Beijing Youth Daily.

"You could see cars from all over the country filling the streets," he added, noting that while most came from nearby Beijing, Tianjin or Hebei, some had driven up from as far as Hainan, the country's southernmost province.

Photos showed long queues of potential buyers outside real estate offices while most hotels in the region were fully booked, reported Agence France-Presse, citing local media reports.

Mr Tian Taohe, a local resident, said he was excited about the change but was also concerned about rising living costs, reported South China Morning Post.

"People make 3,000 or 4,000 yuan a month here, and if house prices rise through the roof and other prices are pushed up, how can we survive?" he said.

A version of this article appeared in the print edition of The Straits Times on April 06, 2017, with the headline 'China reins in speculation in new economic zone'. Print Edition | Subscribe