On April 1, Beijing announced that it will develop the rural area 100km south-west of the capital into a special economic zone. Within hours on the same day, property prices in the area jumped from 8,000 yuan (S$1,620) per sq m to 30,000 yuan.
Even before any concrete plans were made known, hordes of investors descended on the area to snap up whatever property was available.
Commenting on the Xiongan New Area frenzy, Mr Joe Zhou, head of research for JLL China, told The Straits Times: "It started with the first- and second-tier cities last year. Since the beginning of this year, the third- and fourth-tier surrounding those big cities started seeing huge price jumps, which prompted local governments to start restricting sales. Since investors were not able to buy in the big cities, they turned to the smaller cities nearby."
Despite the cooling measures to stamp out speculation, investment demand remains high in the Xiongan New Area. At least 45 cities have set out new restrictive rules since the end of September last year. Many of those are concentrated in the Beijing-Tianjin-Hebei, and Pearl River Delta regions, as well as the Yangtze River economic belt.
Buyers told The Straits Times they think property is still the best place to park their money due to a dearth of investment options within China. A crackdown on speculative activity in the stock markets since 2015 and a tightening of controls on capital outflows have limited their choices.
"In the past 10 years, there's nothing more lucrative than the property market," said Ms Lisa Ren, 31, a Beijing-based asset manager who has four apartments under her name.
Her apartments in Hebei, Shandong and Hainan have all at least doubled in prices in the past three to five years. As for her Beijing apartment, it had more than tripled from six million yuan to 20 million yuan in the same period.
She is planning to add a landed property in the Beijing suburbs to her portfolio despite the slew of restrictions. "I can always put it under my parents' names," she said.
Another Chinese buyer, Mr Nick Wang, told The Straits Times that the cooling measures meant he could not buy a third residential property in Shanghai. But nothing is stopping him from upgrading his current three-bedroom family home to a bigger apartment.
"My mortgage payment is only about 5 per cent of our total household income," said the 34-year-old IT manager in a multinational firm. "I'm planning to borrow more money from the bank to buy a new flat."
Mr Zhou said upgraders and young people buying their first apartments are major drivers of the property market in first-tier cities like Beijing, Shanghai and Shenzhen. Prices in these cities will continue to climb as demand from these two groups remains strong.