PROPERTY MANIA: An apartment project takes shape in Qionghai, Hainan. The national program to build Hainan into an international tourist resort has triggered a property rush across the island (MENG ZHONGDE)

The real estate sector has been a significant driver of the economy and land sales have provided a vital source of revenues for local governments, said Yu.

But the possibility of a bubble burst is reason enough to put up defenses, said Tong Shijun, General Manager of Hainan-based Chum Capital Group.

"More than 70 percent of property purchases here are speculative in nature, leaving many units unoccupied," added Tong. "That's why you see very few lights on at night in some city communities."

While mainland investors hoard empty flats to make a quick profit, many local residents have been left out in the cold. Among them is Huang Yuanxing, a taxi driver in Sanya, who currently lives with his wife and 10-year-old son in a rented house.

Since the beginning of this year, the taxi business in Sanya has flourished as buyers flocked to grab houses. But for Huang, the increase in business has brought only negative side effects.

"Having my own home is a distant dream now, even though I can make at least 5,000 yuan ($732.2) a month," said Huang, in an interview with the Economic Information Daily. "For years we have saved every penny for an apartment so we don't have to move from one rental house to another."

And family woes, like Huang's, are only deepening—the surges in property price are spilling over into rent rates and hotel charges, and could possibly affect consumer prices.

"Living in Sanya is becoming unaffordable for average bread-earners like us," said Huang. "Perhaps we will have to move to the countryside for retirement."

Zhang Chunchang, General Manager of Hainan Yedao Co. Ltd., a Haikou-based beverage maker, also issued a note of caution. "The frothy real estate prices are likely to inflate operational costs for enterprises on the island, and put a dent on many other sectors," said Zhang. "For profit-minded entrepreneurs, it is a major temptation to put aside their backbone businesses and take the plunge into property speculation."

Even the most promising tourism industries may receive a blow from the side effects of the house building spree, said Wang Jiansheng, Vice Chairman of the Hainan Tourism Development Research Association.

"Rising hotel charges are pouring cold water on travelers' interests," said Wang. "More disturbing, though, is the fact that reckless property expansion will cause disruptions to the natural environment, the biggest draw for tourists."

Counter measures

Efforts to cool the overheating property market are already in progress.

The province will step up affordable housing supplies for low-income residents and improve the housing accumulation fund system, said Luo Baoming, deputy to the 11th NPC and Governor of Hainan Province at a press conference during this year's NPC session.

Measures will also be taken to streamline the property market and clamp down on speculation, said Luo.

The most urgent task is to hammer out a reasonable blueprint for the island to focus on tourism and other service sectors, and fend off blind real estate investments, said Zhou Ganshi, an academician with the Chinese Academy of Sciences, at the Boao International Tourism Forum held in March in Hainan.

It is also necessary to increase local residents' income and repair the social safety net to help underpin the weak economic foundation, he added.

Property developers on the island should attach importance to environmental protection and energy conservation in project location, design and construction, said Li Bingren, chief economist of the Ministry of Housing and Urban-Rural Development, at the forum.

Yu Jinhua of Huatai United Securities, echoed Li's opinion. "What made Hainan unique were less crowded beaches, cheap and delicious seafood and green mountains, instead of mushrooming houses," he said.

Yu said that Hainan still has a long way to go before becoming an international tourism resort.

"The transport bottleneck, for instance, needs to be removed," he said. "The warm, humid climate makes Hainan ideal for pineapples, coconuts and mangoes, but many farmers in the deep mountains have no way of moving their products out."