Sanya Property Investments – Southeast Asia’s Latest Booming Tropical Paradise – Should You Buy Now
First, this article gives you a quick yet detailed overview of the fast-growing market in Sanya, Hainan Island, China. Is Sanya an appealing tropical destination to visit or invest? The answer by this author who purchased a beachfront apartment here 3 years ago for only USD $75 per square foot is: Definitely Yes. Visiting websites such as www.sanyaexpat.com and www.sunnysanya.com will give you alot of detailed information about the area. Secondly, you will find a detailed summary of the key areas in Sanya to consider making an apartment purchase. Which areas of the city are best for rental income? For living? For appreciation? What are the various risks to consider including the ability to obtain a mortgage as a foreigner?
The vast majority of international brand hotels are opening resorts along the lovely coastlines of Sanya, located at the southern tip of Hainan Island below China’s mainland. In fact, Sanya is located 150 miles due east of Vietnam in the tropics, a genuine tropical paradise with nicer, milder temperatures than sweltering Thailand and Malaysia where temperatures too often hover from 35 to 40 degrees. Sanya rarely tops 32 degrees in the summer and averages 20 to 26 in the winter high season.
Here is that surprising list of resorts already opened or opening soon:
1. Mandarin Oriental: At the end of 2007, the oriental luxury of Mandarin Oriental comes to Sanya with the opening of their first property in China at the local-flavored Da Dong Hai beach in Sanya.
2. Banyan Tree and Intercontinental: Over the hill at Lu Hui Tou’s Xiao Dong Hai beach, the Intercontinental and Thailand’s Banyan Tree are opening 5 star resorts alongside the area’s newest golf course, all currently under construction.
3. Ritz Carlton: At Ya Long Bay you find the area’s luxury market with the latest resort from the highly respected and recognized Ritz Carlton brand, scheduled to open in December 2007 in addition to a Sofitel by Accor Group.
4. These hotels join the existing 5 star Ya Long Bay resorts including the Sheraton, Hilton, Marriot, Holiday Inn, Crowne Plaza, Horizon, Mangrove Tree, and Gloria.
5. A bit further north on Hai Tang Bay resorts by Le Meridien, Westin and others are reported to be breaking ground.
In partnership with private investment and real estate development groups, these well known private hospitality companies are opening and managing their top resorts here on the heels of government infrastructure being very well developed in the area. We find modern paved roads lined and landscaped to international standards, an expanding airport facility and efforts of the tourism and airline industries to promote internationally. The government tourism ministries and airlines continue to work together to add flights and routes, expanding domestic and international flights into Sanya from the major city hubs of European and Southeast Asia including a variety of weekly charter flights.
All of this development in Sanya is being fed by a solid, expanding number of leisure travelers along with the MICE business travel market (meetings and conferences). And it is safe to say that as in the rest of China, such expansion is leading to higher and higher real estate prices which began at bargain levels just three years earlier when I purchased my 800 square foot beachfront apartment here.
Here is a summary of the six key areas in Sanya to consider for residential real estate purchase:
A. Da Dong Hai..see photo…planned as an international and domestic beach tourist area…the very nice local beach area where the Mandarin Oriental is opening and also my neighborhood where I purchased at Lan Hai Garden in 2003. This tourist area is just over the hill from Sanya city, not very large, 2 blocks by 3 blocks, and is very much a tourist center neighborhood, much like Patong Beach, Phuket, but not yet as well developed. The water and beach here is very nice…a 3km crescent shaped beach surrounded by low lying mountains all around, facing south with a new 2km beachside boardwalk/café area….prices are 10k to 15k per square meter depending on location detail….Very few units available for purchase….Beachfront apt units currently suffer with music noise from the beachfront bars….During December and January, 10,000 Russians descend upon this place turning it into a little Moscow. In February, mostly Chinese tourists. Finding it’s style and vibe.
B. Sanya Bay…planned as a primarily residential area, facing west, great wide open ocean views for 20 km, the best sunsets in Sanya, BUT the beach and sand is not very nice, the water is more brown and murky, not as clean and nice…on the plus side as we enjoyed last week, there are clusters of palm trees and grass running along this relatively deserted stretch of coast making it a great place to throw a blanket under the palm trees in the shade at the beach…apt prices run similar to Da Dong Hai down to around 20% lower. Very local, residential feel with locals doing their dancing/exercises in the main parks daily, adjacent to downtown Sanya City. I think apts 2-3 blocks off the beach front could be a nice buy at 7k psqm…
C. Hai Po – this is the area continuing further out Sanya Bay past the city, between the Holiday Inn and Kempinski are many very nice apt developments. However, this area is much more isolated and adjacent to the airport. You MUST own a car or scooters if you live here. Airplane approach noise. Also note, marina facility being developed near the Kempinski…
D. The Times Coast development at the mouth of the river into the ocean, just over the hill from Da Dong Hai…this is the 2nd best prime spot after beachfront in my opinion. It is centrally well located and well developed, seven towers in total being built….These apts overlook the two rivers which come together at the ocean and which are now fishing village areas but will be turned into boat slip marinas….Easy walking access 5 minutes to downtown and riversides, 15 minutes over to Da Dong Hai area….tower one next to main street right at the river bride is much noiser, tower 2 not bad, tower 3 is ok…
E. Airport road…sub prime residential developments…there are many very nicely designed new apartment complexes being built along the main road of Sanya about a 5 minute drive to the beach…there are also apt complexes that are 2-3 blocks back from the Sanya Bay beach areas…These properties can be bought from 5k to 8k rmb per square meter. They are a short drive into the city….some of these apts and villas are located along the river front…again, the further out you go, the more you need to consider transportation issues…
F. Ya Long Bay – as this is earmarked as the luxury international tourist area, apartments here associated with the resorts at much higher prices per square meter. More later…
Rental Income? Da Dong Hai tourist area apartments are prime for tourist rental income averaging 4500 EU/45,000rmb rental income for the 7 month high season period from October to May, month of February alone minimum 10,000rmb rental. The daily rental rate continues to climb each year by about 25rmb per night, currently 200-280rmb per nite.
So then calculating a 100sqm apt purchase at 1 million rmb would offer about a 4.5% annual yield for the coming year, probably yielding 5 – 5.5% for 2008, 5.5 – 6% for 2009.
My humble analysis is that the subprime apartments at 5 to 8k per square meter are still a very good investment now. I have a gut feeling belief that the beachfront apartment properties like mine could linger for several years in the current market price range of 10 to 15k per square meter. Other observers believe that in 3 years prices will be double again to 20-30k per square meter. While that would make me quite happy, I just don’t believe that will occur…seeing red flags…an increase in the various peaks and volatility in the Chinese economic growth situation, stock market, even consider USD currency issues, etc. While I am a keen researcher as a businessman and have a knack for thin-slicing and identifying the essentials, I am not a professional market and economic research analyst. Do YOUR due diligence.
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