10 years of soaring sea view houses: falling prices shatter the sea view dream of the middle class

Tencent News Prism

2024-05-16 15:57Published on the official account of the "Prism" column of Tencent News in Beijing

Located in Riyue Bay, Wanning City, Hainan Province, the island has been demolished. Photographed by the author

Author | Yue Jiachen

Edit | Wang Weikai

Produced by | Prism Tencent Xiaoman Studio

The sun, the sea, the beach, and having a house with a sea view used to be a dream for many urban middle classes.

"When I first bought a house, I faced the sea every day, and I felt that all my worries were gone." Five years ago, Chen Peng (pseudonym) bought a sea-view house in a coastal city in South China at a price of 10,000 yuan per square meter. He longs to be able to enjoy the beauty of the place during his vacation or retirement.

Looking back, Chen Peng realized that buying a sea-view house was an impulse, and in that era when housing prices were "rising one day a day", going to the beach to enjoy a better life and getting a good return on investment was packaged as a kind of "just need".

In the past few years, the entire seaview housing market has been shrouded in this "pseudo-rigid demand". From Beidaihe, which is 40 degrees north latitude, to the coast of the South China Sea, which is 18 degrees north latitude, the 30,000-kilometer long coastline is full of all kinds of buildings.

For developers, the low cost of land and crazy home buyers made the seaview housing project once their "cash cow". Taking a project in Qingshuiwan, Hainan Province as an example, in 2017, in the heyday of seaview housing, the gross profit margin of this real estate was as high as 62%, while the average gross profit margin of the real estate developer was only 26.5% that year.

Driven by high gross profits, they frequently acquire land and build houses on the coastlines of various places, and the land area is insufficient, and some even reclaim land and ask for land from the sea.

In order to attract home buyers, they created a beautiful vision of seaside living, held a grand rush purchase ceremony, and also provided free charter flights and chartered cars for home buyers.

In terms of housing types, sea view houses are a special existence, which will infinitely magnify the investment attributes, and even make people ignore the residential attributes. Most of the owners are inland people who do not live on the seaside all year round, and most of the sea-view rooms have no permanent residents, but are rented by tourists in the form of apartment hotels, and only have a lively time during holidays.

Nowadays, destocking is the core goal of this round of property market regulation, and in the new cycle, where will the sea view house go?

Wet seascape dreams

"A home in the snow town, a home by the sea." This is the dream of Zheng Jianxin (pseudonym), a native of Northeast China.

As soon as winter came, Zheng Jianxin's relatives and friends began to go to the beach. Owning a house with a sea view has become a symbol of "success" in the eyes of friends. In the early years, advertising slogans such as the scarcity of first-line seascape resources, large room for future appreciation, and beautiful seaside life were quite popular in the circle of wealthy people in northern counties, and many people were also attracted by the "migratory bird" life.

The sea-view house is also divided into "three, six, nine and so on", in Zheng Jianxin's social circle, Hainan's sea-view house has the highest status, and the sea-view house in the northern coastal city is not so "successful".

Being able to own a house in Hainan has become the standard for many high-income people. Seven years ago, Zheng Jianxin bought a loft apartment of about 40 square meters on Ocean Flower Island in Hainan Province and spent 800,000 yuan.

"The whole plane is here to see the house." Zheng Jianxin recalls the situation at that time, "The developer chartered a lot of buses, and it felt like the sales centers across the country were pushing the houses there. Visiting Ocean Flower Island can even reimburse travel expenses...... In retrospect, the free stuff was the most expensive. ”

At the time, the island was still a vast ocean, and they were shocked to see how thousands of homes could be sold by developers simply by pointing to an empty beach. However, some people never set foot on Ocean Flower Island after paying for their house.

The sun, the sea and the sand are all attractive, but humidity and wind are also the norm for seaside life.

In fact, life on the seaside is not as good as imagined. A short stay is acceptable, but if you live for a long time, you will have to face a variety of problems, such as dampness, which is a headache for many northern buyers.

In addition, most of the newly developed sea-view houses are located in remote locations, and transportation, medical care, shopping, and catering are not very convenient, and the living experience is far worse than the "hometown" where you have lived for many years.

Zheng Jianxin introduced to the author that no matter how many floors there are, as long as the windows are opened for ventilation, it will be very humid. The corners of the walls are moldy, the wooden floors are arched, the electrical appliances are damp, and the bedding can even "wring out water......

In Hainan, blocked by Niuling Mountain, Wanning, Qionghai, Wenchang, Lingao, Chengmai and other places north of the mountain range are more humid than Sanya. And these cities also happen to be areas with rapid construction of sea-view houses in recent years.

"In winter, the wind blows so much that it will fly, and in the summer there are footprints on the floor." Chen Peng, who bought a house with a sea view, was also troubled. According to Chen Peng, his house needs a lot of money to maintain every year, but he doesn't spend much time there in a year, and most of the time it is empty.

Nowadays, Chen Peng has a new thinking about investing in real estate: investing in real estate is not something to be taken for granted, and many factors need to be considered, including location, market environment, maintenance costs, policies, etc.

At present, he is considering selling his sea view house. "If you love someone, bring him to the sea; If you hate someone, bring them to buy a house with a sea view. ”

Stung owners

There is a lot of room for appreciation, which is the beautiful vision of the owners of sea-view houses, but this once good wish is stinging them, and many sea-view houses have not appreciated, but have become "negative equity" that is difficult to sell.

In the coastal city where Chen Peng bought a house, a 70-square-meter two-bedroom apartment with decoration costs only 250,000 yuan, a drop of more than 50% compared with the price three years ago. On Ocean Flower Island, the sea-view house that I couldn't buy in the past was only 200,000 yuan......

The abundant waterfront resources have also attracted many developers, and the large-scale integrated tourism projects they develop are lined up along the coastline.

A house on the coastline of a coastal city in southern China. Photographed by the author

The sea-view houses in the above-mentioned coastal cities in South China are a smash hit, attracting investors from the surrounding first-tier cities. In 2011, some projects even set a myth of selling 4,000 sets a day. The sea-view houses there will reach a peak of about 10,000 yuan/square meter in 2021, and some houses with particularly good landscape views will even be sold for 15,000 yuan/square meter.

However, since the middle of 2021, housing prices have been declining, and the average listing price of second-hand houses has fallen from a high of 10,700 yuan/square meter in July 2021 to 6,814 yuan/square meter at the end of 2023, a decrease of about 36%.

In January 2024, the price of a house of more than 70 square meters in a community in the region is even as low as 250,000 yuan, equivalent to only 3,300 yuan per square meter.

What's even more troublesome is that even if the price is cut in half, it will not be easy to sell. In a sea-view housing community, hundreds or thousands of houses for sale are almost the norm.

In Hainan, the price of sea-view rooms is also "folded in half". Even a seaview community in Clear Water Bay, which was once the "sales champion", could not withstand this "cold snap".

The Blue Golf Phase III project in the western area of Clear Water Bay is a project under construction, and the lowest price of the project has been as low as 16,800 yuan per square meter for promotional purposes, compared with the unit price of a sea view house in Clear Water Bay five years ago when it exceeded 40,000 yuan per square meter.

The above offer was made by an underwriter in Clear Water Bay. For a long time, the project has implemented an "underwriting" model, in which the capital is contracted as a whole, and the funds are paid to the developer and responsible for subsequent sales. The two projects currently under construction have been contracted by bosses from Hebei and Inner Mongolia.

On Ocean Flower Island, the current listing price of second-hand houses is about 11,000 yuan per square meter, and some are even less than 10,000 yuan, which is also "folded" compared with the house price five years ago.

A salesperson said that for only 220,000 yuan, you can buy a loft apartment of more than 20 square meters to see the sea. If you want a set of 90 square meters of three bedrooms and one living room, it only costs 750,000 yuan.

The intermediary shop on Ocean Flower Island, the sea view room is only sold for 200,000 yuan, photographed by the author

In addition to being difficult to sell, it is not easy to rent out a house on Ocean Flower Island.

Wang Yang (pseudonym), who has been an intermediary on Ocean Flower Island for five years, said that short-term rentals are the main ones there, and the peak season for short-term rentals is from December to February of the following year, and there are many fewer long-term renters, and many houses are vacant for up to half a year. "Some of the early homeowners have never even been here, and they have directly entrusted their houses to agents or serviced apartments."

According to Wang Yang, the current annual rent of an apartment of about 30 square meters is about 12,000 to 15,000 yuan, and this kind of serviced apartments are everywhere on Ocean Flower Island.

"It's a home after all"

It's hard to imagine that a single house with a sea view can connect two northern cities 700 kilometers apart.

At the beginning of April, an inland city in the north launched a "buy one get one free" preferential activity in the sale of real estate, buying a two-bedroom apartment of 77 square meters, you can get a new sea view house of 108 square meters in Yantai.

"To be honest, this sea-view room is quite biased, and the unit price is not high." At that time, the sales staff of the above-mentioned project said. Currently, the activity has been discontinued.

In recent months, there has been a lot of news about "free sea view rooms". In South China, a brand-new first-hand house of a project has also been rumored to be "free of charge".

 "Now you only need to pay a deposit of tens of thousands of yuan on the spot, and you can get a complete set of sea-view houses." In January this year, the sales staff of the project said.

The total price of a 130-square-meter sea-view house in the project is about 1.6 million yuan, and the unit price is about 12,000 yuan/square meter, of which the down payment is 20%, about 320,000 yuan. The unit price of second-hand houses in the same community or in the same area has fallen to around 6,000 yuan. Selling at the above price, it is obviously difficult to sell.

The so-called "free house delivery" is actually the developer's preferential return of the down payment amount in various names, so as to achieve the purpose of reducing the price in disguise. After signing the purchase and loan contract, the buyer still needs to repay the loan principal and interest to the bank.

For example, Greentown Blue Bay Town covers an area of about 4,800 acres, and Shili Silver Beach Town covers an area of about 4,500 acres......

These super markets, the area equivalent to thousands of football fields, can accommodate the urban population of some small counties.

Some super communities, which have been on the market for more than ten years, are still selling first-hand new houses. For example, China Resources Xiaojing Bay, which opened in 2011, still has new houses for sale. According to data from the China Index Research Institute, as of the end of last year, the inventory of new houses in a coastal city in South China was as high as 6.06 million square meters, and the removal period was more than 25 months.

Yan Yuejin, research director of the E-House Research Institute, said that due to the long-term uninhabited nature of some sea-view houses, the lack of basic commercial support, coupled with the strong corrosiveness of the seaside and the high cost of property maintenance, the entire resource-based real estate dominated by sea-view houses is facing great pressure on sales and resale.

At present, many cities across the country have launched a number of policies, such as liberalizing purchase restrictions and trade-in, in order to achieve the "destocking" goal of "digesting the stock of real estate" and "optimizing incremental housing".

Against this backdrop, the liquidity of sea-view homes is expected to increase.

Liu Siyuan works in a technology company in Shenzhen, and after getting a year-end bonus of 200,000 yuan last year, he bought a sea-view house in a surrounding city, and became the owner of a sea-view house "against the trend".

"After all, it is also a home", this is Liu Siyuan's mentality. He does not expect the sea view house to maintain and increase its value in the future, nor does he care whether it can be sold in the future, but hopes to return to the residential value of the house itself, and set up a home here for himself or his parents at the current lower price.

"Cash Cow"

Low land costs and extremely high profit margins are the driving forces for real estate companies to gather at the seaside.

According to a real estate company in South China, the cost of a house is composed of land costs, construction costs, operating costs of real estate enterprises and various taxes and fees. Among them, construction costs, operating costs, and taxes are relatively fixed, and land costs are the biggest variable factors.

The cost of land, which typically accounts for 40%-60% of house prices, is a determining factor in whether a project can be profitable, the person said. At the seaside, the cost of land acquisition by real estate companies is relatively low.

This also makes "building a city out of thin air" a major feature of sea-view houses. Different from the mature sea-view houses in coastal cities such as Sanya and Xiamen, developers are more keen to "hook up land" in the suburbs of some coastal cities, so as to build a series of sea-view communities and coastal towns.

In a city in southern China, for example, there are at least five sea-view housing projects along the 10-kilometer coastline.

In Hainan, Qingshui Bay is a typical area for sea-view houses. Before 2005, it was a coast used for aquaculture. At that time, a developer acquired 12 plots of land in the first phase of Clear Water Bay at a price of 226 yuan per square meter, with a total amount of 1 billion yuan; In 2008, the second phase of the land in Clear Water Bay was obtained, and the land price per square meter was only 207 yuan.

For comparison, the developer's average floor price in 2023 is 3,200 yuan.

Clear Water Bay has almost some of the best quality sea and sand beaches on Hainan Island. According to the developer's official WeChat, a total of 60,000 owners have bought homes there over the past 15 years.

"Industry-city integration" is the slogan put forward by some developers, and in the past promotional copy, they are also willing to promote themselves as service providers for industrial integration and development, rather than real estate developers.

Plan a seaside town with tens of thousands or even hundreds of thousands of people, and then negotiate with the local government to acquire land at a very low price, and then continue to contribute extremely high gross profit margins and stable cash flow for years or even more than ten years to come. This is the underlying logic of real estate developers "staking land" on the coastline.

In 2009, the developer's Clear Water Bay project opened for the first time, with sales of 6.4 billion yuan that year. Since then, it has become the top seller in Hainan for 9 consecutive years. In the first ten years of trading, the cumulative sales exceeded 88 billion yuan.

The sea view homes there have been contributing to the developer's steady stream of land to be developed and sales. In 2018, the project has been on the market for nine years, and the developer still has nearly 10 million square meters of saleable floor area in Hainan, accounting for one-third of its national land reserves.

With the help of Clear Water Bay Seaview House, the developer has risen from a regional real estate company in South China to one of the top 30 real estate companies in the country in terms of sales.

Hainan used to be the "cash cow" of a number of real estate companies. For example, in January 2010, the contracted sales revenue of another developer totaled about 2.564 billion yuan. Among them, the sales of Hainan reached 520 million, and in that year, the developer in Hainan with three projects, Perfume Bay, R&F Bay, and Mangrove Bay, the sales performance was comparable to the base camp, catching up with Beijing.

In addition, Greentown Group has developed Greentown Lanwan Town in Lingshui, KWG has developed KWG Tinglan Coast, and China Resources and China Overseas have developed Shimei Bay and Shenzhou Peninsula in Wanning, respectively......

The developers who were the first to enclose the land have already made a lot of money, and it is difficult for the latecomers to get the "fat".

In March 2023, the land auction floor price of the Clear Water Bay plot has reached 8,066 yuan per square meter, which is 40 times more expensive than the land cost of the early project in Clear Water Bay.

The hustle and bustle of the past

In order to make ultra-high profits, the land on the coastline can no longer satisfy the appetite of developers, and some real estate companies have begun to ask for land from the sea - land reclamation.

In Hainan, the myth of Ocean Flower Island is almost universally known. This is a giant artificial island standing in the northwest corner of Hainan Island, located in Danzhou City, about 100 kilometers away from the provincial capital Haikou, with a total area of about 7.8 square kilometers, comparable to Dubai's Palm Island.

Ocean Flower Island is made up of three outlying islands, like three waves. Island 1 is a cultural tourism service area, covering theme parks, shopping malls, commercial exhibitions, catering and leisure, while islands 2 and 3 are dominated by residential and holiday apartments.

Since obtaining the "Certificate of Sea Area Use Right" in August 2013, the developer has invested about 81 billion yuan in Ocean Flower Island in more than six years. Why do developers go to such lengths to reclaim land? The answer is still the low cost of acquiring land.

According to the past financial reports of the developers of Ocean Flower Island, the original value of their land reserves on Ocean Flower Island was 7.303 billion yuan, and they had a total of 11.8146 million square meters of land reserves, according to which the floor price of Ocean Flower Island was only 618 yuan per square meter. According to the developer's 2016 financial report, the floor price of the ninth phase of the Ocean Flower Island project, which has the lowest land cost, is as low as 414 yuan per square meter.

According to CRIC statistics at that time, in 2016, the developer's national land acquisition amount was 115.047 billion yuan, with a construction area of 49.9199 million square meters. It can be calculated that the average land cost in the country at that time was 2,304 yuan per square meter.

After two years of reclamation of 12,000 acres, in December 2015, Ocean Flower Island was officially sold to the outside world and the "Global Opening Ceremony" was held. According to data disclosed by the developer, Ocean Flower Island raised 100,000 visitors on the first day, generating sales of 12.2 billion yuan.

In the atmosphere of "sea view house fever", by 2020, the price of new houses on Ocean Flower Island will rise to more than 20,000 yuan/square meter, and some houses will approach 30,000 yuan/square meter.

Located in Wanning City, Hainan Province, Riyue Bay is composed of two artificial islands resembling the sun and the moon, covering commercial districts and sea-view residences.

Compared to Ocean Flower Island on the west coast, Sun Moon Bay has an advantage in the seascape, which is a famous surfing spot, where you can see waves pushing towards the beach everywhere, some people are holding various surfboards to the sea, some people are galloping on the top of the waves, and some people are learning to catch the waves.

In March 2017, the Riyue Bay project was launched, with the average price of high-rise apartments in the first phase of Ridao being 23,000 yuan per square meter and the average price of sky villas being 28,000 yuan per square meter. According to the financial report, this project contributed 3.17 billion yuan in sales to the developer that year.

However, due to the lack of a corner of the current Hijima, it looks like the moon from high altitude, and the originally planned Higashima has been demolished due to the destruction of the marine ecology.

Nowadays, with the end of the wave of sea-view house development, how to operate these sea-view houses and create sea-view cultural tourism projects has become something that many places are doing.

On April 20, 2024, 9 years after the sale of sea-view houses on Ocean Flower Island, the supporting cultural tourism project "Water Kingdom" was officially opened. In addition, Ocean Flower Island has also created a light show, a commercial street, and a hotel in Oubao. During this year's May Day holiday, Ocean Flower Island received more than 100,000 tourists.

On the east coast of Hainan Island, the yachts in Clear Water Bay and the surfing in Perfume Bay have also attracted a lot of attention......

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