Firms, individuals rush to cash in on Xiongan New Area
Authorities have detained seven people as the Xiongan New Area in North China's Hebei Province reiterated its ban on land and property purchases amid soaring home prices.
Home prices in Rongcheng county, one of the three counties comprising the Xiongan New Area, were between 5,000 yuan ($726) and 6,000 yuan per square meter a week ago and soared to 20,000 yuan within days, a Rongcheng resident told the Global Times on Wednesday.
The Xiongan preparatory committee vowed Tuesday to crack down on the illegal construction of new houses and the second-hand housing trade, the Xinhua News Agency reported.
The committee said "all forms of illegal trading of property are not protected by law," adding that it would strictly implement the central authorities' guideline that states, "Houses are for residential purposes only."
The committee also announced that seven people had been arrested for real estate violations. By April 4, the committee had discovered 765 real estate violations, demolished 125 illegal buildings and shut down 106 real estate agencies, the Hebei Daily reported Wednesday.
China announced on Saturday the establishment of the Xiongan New Area, a landmark new economic zone about 100 kilometers southwest of Beijing.
The new zone is part of a more ambitious plan to jointly develop Beijing, Tianjin and Hebei to improve the region's development, environment and public services, and bridge the gap between the capital and areas surrounding it, Xinhua said.
"Hebei is the least developed area in the Beijing-Tianjin-Hebei (Jing-jin-ji) Region. The new strategy is aimed at making use of Hebei's geographical advantage to develop the province," Sheng Guangyao, a research fellow at the Institute for Urban and Environmental Studies of the Chinese Academy of Social Sciences, told the Global Times on Wednesday.
Sheng said that "high home prices are very harmful to the new zone as they prevent people and companies from moving in." He stressed that "Xiongan relies on industrial development."
"Most of the Jing-jin-ji region's cooperation focuses on environmental protection. To develop the Xiongan New Area, measures should be taken to attract industries considered inappropriate in Beijing and Tianjin to the area, which has more available land," Sheng said.
Sheng added that "the housing trade restrictions are temporary until Xiongan carries out its own housing policy."
The Global Times has learned that the government of Rongcheng had sealed all local estate agencies and rental homes since Sunday, after thousands of people descended on the county to purchase homes.
The local government also suspended real estate agencies in the Xushui district, about 20 kilometers from Rongcheng.
The Rongcheng government has been gradually reducing the housing trade since May 2016, another local resident surnamed Wang told the Global Times.
The government Wednesday announced on its Wechat account that it had closed 35 real estate agencies, demolished 48 illegal buildings and suspended operations at 41 enterprises since March.
Chain reaction
Besides home prices, Chinese bourses rallied Wednesday, with more than 20 shares related to the new national strategy, mainly in the property, cement, steel and construction sectors, surging to the daily limit immediately after trading opened on Wednesday.
Concept stocks on the Hong Kong Stock Exchange also received a massive boost from Xiongan. For instance, BBMG Corp, a construction materials producer based in Beijing, surged 34.67 percent, closing at HK$4.75 ($0.60) on Monday.
The price of domain name xiongan.com also skyrocketed to 1.76 million yuan after Saturday, according to Chinese domain name website domain.cn.
"The news broke out without warning. It is understandable that people sought ways to get a free ride," Sheng said.
"We have to wait for at least 10 years to see Xiongan's outcome."
