As China has quickly climbed up the economic ladder and is now the second largest economy in the world, income levels among people (especially in big cities) have been on the rise, resulting in a strong growth in inbound tourists over the past few years.
Average annual disposable income of urban residents in 2013 rose 9.7% year-on-year to nearly RMB30,000, according to official statistics announced on 20th January. In first-tier cities such as Beijing and Shanghai, it is estimated that over 300 million households are now making RMB100,000 a year, which could be considered as middle-class in China due to the much lower living cost.
Over the past decade, domestic tourism has grown over 10 percent annually and is now contributing over 4 percent of the total GDP growth. In 2013, China saw a total of 55.7 million inbound tourists, making about 3.25 billion domestic trips in the past year, up 11.6 percent from 2012. Total spending soared 14 percent from a year ago to RMB2.54 trillion, according to the latest report released from The China Tourism Academy.
On the back of blooming demand for holiday homes and other tourism facilities, tourism real estate projects have become attractive assets to both developers and individual investors in recent years. An increasing number of middle-class tourists are buying holiday homes in Hainan, Lijiang and Xiamen, not only solely for investment but also for retirement and holiday getaway.
Developers and domestic leisure service providers are also showing great enthusiasm for large tourism properties, such as golf courses, spas, shopping malls, resorts and theme parks. Total investment on tourism property developments has soared over RMB1 trillion last year, accounting for over a quarter of total real estate investment. A rough estimate suggests that over two thirds of the top 100 developers in China have already stepped into the tourism real estate market.
Last October, Fosun International announced to invest around RMB10 billion in tourism-related real estate projects in Sanya, with a focus on resorts or commercial complex. On the other hand, Agile Property last year acquired 13 land plots in Xishuangbanna, Yunnan to build a tourism related mix-used development with a total investment of over RMB20 billion. Wanda is building one of the largest commercial integrated projects for cultural tourism in Harbin, Heilongjiang’s capital city, with a total investment of RMB20 billion.
According to the Government’s forecast, the number of domestic tourists and their spending will keep their momentum in 2014 and are expected to reach 3.58 billion and RMB3.2 trillion. With the China’s economy keeping its pace and rising income levels in the future, coupled with the releases of the Outline for National Tourism and Leisure and China’s new Tourism Law in 2013, domestic tourism will maintain strong growth in 2014 and we expect to see more developers to enter the tourism real estate market.