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Travel & Holiday

China's scenic 'Dubai' now a ghost town

Prices on Chinese island plunge, with many desperate to offload properties
The Straits Times - February 25, 2013
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China's scenic 'Dubai' now a ghost town Sports cars parked in front of luxury apartment blocks in Sanya city in Hainan province. Plunging prices on Phoenix Island have exposed the hidden fragilities of China's growing but sometimes unbalanced economy. -- PHOTO: AGENCE FRANCE-PRESSE

SANYA - It was billed as China's Dubai: a cluster of sail-shaped skyscrapers on a man-made island surrounded by tropical sea, the epitome of an unprecedented property boom that transformed skylines across the country.

But prices on Phoenix Island, off the palm tree-lined streets of the resort city of Sanya, have plummeted in recent months, exposing the hidden fragilities of China's growing but sometimes unbalanced economy.

A "seven star" hotel is under construction on the wave-lapped oval, which the provincial tourism authority proclaims as a "fierce competitor" for the title of "eighth wonder of the modern world".

But the island stands quiet aside from a few orange-jacketed cleaning staff, with undisturbed seaside swimming pools reflecting rows of pristine white towers, and a row of Porsches one of the few signs of habitation.

Chinese manufacturers once snapped up its luxury apartments, but with profits falling as a result of the global downturn, many owners need to offload properties urgently and raise cash to repay business loans, estate agents said.

Now apartments on Phoenix Island, which reached the dizzying heights of 150,000 yuan (S$30,000) per sq m in 2010, are on offer for just 70,000 yuan, said Mr Sun Zhe, a local estate agent.

"I just got a call from a businessman desperate to sell," Mr Sun said.

"Whether it's toys or clothes, the export market is bad... Property owners need capital quickly, and want to sell their apartments right away," he added.

"They are really feeling the effects of the financial crisis."

For years, Chinese business owners, faced with limited investment options and low returns from deposits in state-run banks, have used property as a store of value, pushing prices up even higher in the good times but creating the risk of a crash in the bad.

"China had a lending boom... and so if people are using property as a place to stash their cash, they had more cash to stash," said Mr Patrick Chovanec, a professor at Beijing's Tsinghua University.

"At some point, they want to get their money out... (that's when) you find out if there are really people who are willing to pay those high prices."

AGENCE FRANCE-PRESSE

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