By Lusha Zhang and Ryan Woo
XISHUANGBANNA, China (Reuters) – A bus came to a halt amid a tropical rainforest not far from China’s border with Myanmar, dropping off about 30 investors on a property tour, some with children in tow.
Their objective: to snap up a piece of China’s hottest real estate.
Hostesses led the visitors down a winding path hemmed in by frangipani, palm and banana trees. A stone Bodhisattva in lotus position announced their arrival at the showflat.
One of the investors was already on a video call, trying to persuade a friend to buy in. Another praised the curative powers of Xishuangbanna’s temperate weather. Others remarked that the summer lull would be an excellent time for discounts.
The river town in the hills of Yunnan province has seen a 40% surge in new home prices in June compared with a year earlier, ranking fifth among China’s 338 biggest cities, according to private property data provider Qingdao Cityre Estate Data.
With amber sunsets, fresh air and a tongue-twister of a name, Xishuangbanna is seen as a sort of new Shangri-la for property investors – and a respite from tightly wound markets elsewhere in China.
Real estate in eastern and southern cities is under a policy lockdown that has suppressed big price gains since 2017. Central China is slowing after hitting dizzying heights, while the sparsely populated north and west draw only the bravest of speculators.
But Xishuangbanna, thousands of miles from Beijing and Shanghai, ticks many boxes for profit-driven investors. Besides lush landscapes, it has few restrictions on home purchases.
And for the price of a bathroom in Beijing or Shenzhen, investors can get an apartment with a view of the Lancang River.
Ma Mao, 40, a businessman from the northern coal hub of Shanxi, was one of many property investors who have settled in Xishuangbanna.
“I bought some homes in 2017 when I first came here for 4,000 yuan ($581) per square meter, and now prices have risen to more than 10,000 yuan,” said Ma, who moved with his wife and three children two years ago. He now runs a real estate agency.
Big-name developers like Ping An Real Estate Co, Dalian Wanda Group, Sunac China Holdings Ltd (HK:), and Agile Group Holdings (HK:) have all rushed to build to homes there.
The town’s skyline along the Lancang, known as the Mekong in its lower course, is lined with soaring towers of steel and glass. Luxury villas built on wooden stilts stretch far into the rainforest.
Many investors are also betting on Xishuangbanna’s location in the Belt and Road network spearheaded by President Xi Jinping.
About 30 miles from China’s border with Myanmar and Laos, the town of 1 million people stands to gain from increased trade and investment flowing to and from Southeast Asia.
Developers have spared no effort in marketing the town. Posters in a showroom of an Agile Property project showed a high-speed railway map and planned routes from Xishuangbanna to Bangkok (6 hours) and even Singapore (10 hours).
Property investors are also piling into other Yunnan cities such as Tengchong and Ruili. In neighboring Guangxi Zhuang Autonomous Region, the port cities of Fangchenggang and Beihai are seen as strategic places to buy, as they are maritime nodes on the Belt and Road network.
In January-April, home transactions in Yunnan and Guangxi rose 13.9% and 9.8% by floor area from same period last year, respectively, putting them among the four best-performing regions in China, according to data from provincial statistics departments.
New home prices in Xishuangbanna averaged 11,300 yuan ($1,641) per square meter as of the end of June, according to Cityre Estate Data, similar to prices in provincial capitals in central China.
Ma bought 240 units late last year for more than 80 million yuan ($11.6 million). He plans to develop them into holiday suites this year for elderly vacationers.
“I sold my apartments in Shanxi in late 2017 when prices peaked, and invested in Xishuangbanna at the same time when the market has not yet taken off,” said Ma, smiling.
Xishuangbanna really took off in mid-2018 when it became an alternative to China’s resort island of Hainan, where tough measures in April 2018 restricted non-residents from buying homes.
Li Keyi, a 28-year old law clerk from Xiamen, said her parents are selling properties in the coastal city to invest in Nanning in Guangxi.
Other investors are so-called elderly “migratory birds” from the north looking to spend winters in the south.
Li Shuhua, 53, who was on the property tour, flew into Xishuangbanna after traveling in Turkey.
The Hebei native had already bought one 108-square-metre apartment as a seasonal vacation home, paying 1.14 million yuan in full.
She had joined the tour to look at a project developed by Sunac on behalf of her younger sister, who has never been to Xishuangbanna but whom Li persuaded to invest there.
But it is not paradise. A Shanxi investor surnamed Yang said a mosquito was all it took to dissuade her from buying.
Yang’s husband was bitten on the second night of their visit and suffered a severe allergic reaction. There was no 24-hour pharmacy near their hotel.
Like two other Shanxi couples on the tour, Yang and her husband scrapped their Xishuangbanna investment plan.
And some people who have already invested, like Ma, have run into problems.
Ma said he and five of his friends signed a 200 million yuan contract for 71 villas developed by Ping An Real Estate last year. He said they had already paid 100 million yuan.
The project was scheduled for completion last month, but Ping An suspended construction for eight months, resuming work only recently. The company did not comment on why construction paused.
Ma said the developer would not sign formal contracts for 45 of the units he bought and did not return the deposits. Ping An told Reuters it had taken back some units because the buyers had not met payment deadlines, a claim Ma denied.
The project will be finished by April 2020, the company said.
“This has totally messed up my plan, and is putting massive cash-flow pressure on me,” Ma said.