Construction resumed recently on the 38-floor Saige International Plaza on Binhai Boulevard in Haikou, capital of south China's island province Hainan.

The plaza, which had been left unfinished for eight years, is expected to become the largest financial trading center in Hainan upon its completion early next year, according to its developer.

This is typical of measures taken by the government of Hainan, China's largest special economic zone (SEZ), in dealing with unsold buildings and half-finished real estate projects, or what some local economists call "property bubbles."

In accordance with a work schedule of the Hainan Provincial Government, all half-finished housing projects in the province, with a designed floor space of 4.3 million sq. m., should have been properly handled, reshaping Hainan into a neat, picturesque island resort for holiday-making by late 2006.

Hainan, which used to fall under the jurisdiction of south China's Guangdong Province, became a province in its own right and was also proclaimed as the nation's fifth special economic zone in April 1988. Hainan had been the worst hit by the housing bubble.

By late 1998, a total of 23,700 hectares of land had been left idle on the island because of abortive construction. Some 4.56 million sq. m. of commercial apartments were unsold, and even more housing projects, with a combined floor space of 16.3 million sq. m., were suspended of construction or left unfinished.

The State Council, China's cabinet, came to Hainan's rescue by announcing in 1999 a series of preferential policies, including exemption of business taxes and deed taxes in the transformation of unsold commercial apartments into affordable, cheap rental housing, in a bid to bust the housing bubble.

Up to now, the total floor space of unsold commercial apartments has been reduced to 540,000 sq. m., and that of half-done housing projects has been slashed to 4.3 million sq. m., most of which are located in Haikou, the provincial capital, said Xia Enshu, head of Hainan Provincial Construction Bureau.

Hainan has been racing against time in tackling the serious problem of by late 2006, Xia confirmed.

On the one hand, the province has lowered its supply of commercial apartments from a pre-set quota of 2.5 million sq. m. to 2 million sq. m. a year.

On the other hand, the province has been redoubling efforts to attract buyers or investors from outside Hainan for its housing market because in Hainan, with a population of only eight million and 7,736 yuan (about US$954) in per capita annual disposable income for urban residents, there is not much room for real estate market development, explained Xia.

Chen Ci, mayor of Haikou, where 80 percent of the half-finished housing projects are concentrated, disclosed that his government would buy 40 percent of the half-finished housing projects and turn them into affordable housing projects, such as schools or forested land.

"Before the half-finished housing projects are properly tackled, we will strictly follow a policy of placing a lid on the gross volume of commercial apartments supplied to the market," said Mayor Chen.

Chen also echoed Xia's call for stepping up the marketing of housing to investors from outside Hainan Island, which is separated from the Chinese mainland by the Qiongzhou Straits.

A range of promotional events have been organized to woo outside corporate investors to Hainan, such as hosting housing fairs in Chinese mainland cities like Shanghai and Harbin, capital of northeast China's Heilongjiang Province.

The efforts have had some initial successes.

Private investors have been traveling to Hainan, where the conditions for human inhabitation are superb, to make inspection tours before purchases of housing. Some of them have chosen to stay on by investing in the housing market on the island.

Corporate investors are coming too.

CITIC Pacific, whose businesses include power generation, communications and aviation, with headquarters in Hong Kong, signed a cooperation agreement with the government of Wanning City, southern Hainan, in early September, planning to pump 10 billion yuan (US$1.23 billion) in developing the city's Shenzhou Peninsula on the eastern coast of Hainan.

Mr. Larry Yung Chi Kin, Chairman of CITIC Pacific, said he hoped to build Shenzhou Peninsula into a first-class world conference center and a tourism and holiday resort as well.

(Xinhua News Agency September 26, 2005)