Property

Great lakes?

Xi’an has big idea to boost real estate sales

Soon to have lakes too: Xi’an

In 119BC, Emperor Wu of the Han Dynasty built the Kunming Lake near Xi’an. He did so to increase the local water supply and, more importantly, to train his navy. It was the first man-made lake in China. After about a thousand years the lake dried up and became farmland.

That hasn’t dampened the enthusiasm for man-made lakes in China since. And the authorities in Xi’an – the former capital of the Tang Dynasty (618-907AD) – recently unveiled their own plan to add 15 new lakes (on top of 13 already under construction). The plan is to recreate the historical Kunming Lake, except on an even bigger scale.

The plan comes with a hefty price tag. The Xi’an Water Bureau reckons that the project will cost Rmb10 billion ($1.6 billion) and that it will take 10 years to complete all 28 lakes.

As ever in the current financial environment, the next question is who is going to pay for it.

“The government will pay one-third of the total investment for the lake project, and we will attract more investment from other investors,” says Yang Li, director of the water bureau.

But why are so many man-made lakes needed? The official explanation is that Xi’an faces an acute shortage of water. Residents have access to water resources one-sixth of the per capita national average, reckons the Oriental Morning Post.

But critics are less than convinced by this explanation, and say it’s just another expensive project designed to boost GDP in the shorter term.

“Of course, as with most of the high-cost vanity projects local governments trot out to make their development reports look better to central authorities, it will be local taxpayers who are asked to foot most of the bill for these man-made lake,” bridled the Global Times, adding that the central authorities should step in to stop local officials from squandering money.

There’s also the requisite property angle.

Insiders say the new lakes will increase the value of land in surrounding areas, suggesting that while current housing prices for urban areas of Xi’an are about Rmb7,500 to 10,000 per square metre, once the lakes are completed, lake view apartments will likely cost at least twice that amount (they are more popular because feng shui principles suggest that water enhances the occupant’s wealth).

There’s also a plan for one lake to support a tourist resort and waterfront complex for 600,000 residents.

“If you have 10 acres of land, of which 5 acres are commercial housing and the rest are lake, the value of that property is definitely worth more than just 10 acres of housing,” Mao Shoulong, professor of Renmin University, admits.

Perhaps some of the demand for high-end properties could come from future Samsung employees living in the city. As we reported in WiC149, the South Korean firm is building a major new chip factory in Xi’an. It will invest $7 billion in the plant’s first phase, but when all three phases are completed around $30 billion will have been spent.

Of course, for a city that is already running low in water, others question how the authorities are going to find the water to fill their latest masterplan.

“The government is definitely unable to get enough water for 28 lakes simply by collecting rain and recycled water,” says Li Hui, director with the Xi’an-based Shaanxi West-East Planning Design Institute. “As an inland city, it’s geographically difficult for Xi’an to collect water and the existing lakes already lack sufficient water sources.”

That sounds like a conundrum, although possibly one that Xi’an’s town planners will leave for another day. The city’s first man-made lake took a thousand years to run dry. But its latest effort may take almost as long just to fill.

Property purchasers beware…


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