Chinese Property Bubble?

Freddie59

Interesting one:

http://www.bbc.co.uk/news/magazine-17390729

In Inner Mongolia a new city stands largely empty. This city, Ordos, suggests that the great Chinese building boom, which did so much to fuel the country's astonishing economic growth, is over. Is a bubble about to burst?

A huge statue of the mighty warrior Genghis Khan presides over Genghis Khan Plaza in Ordos New Town. The square is vast, fading into the snowy mist on a recent Sunday morning.

Genghis Khan Plaza is flanked by huge and imposing buildings.

Two giant horses from the steppes rise on their hind legs in the centre of the Plaza, statues which dwarf the great Khan himself.

Only one element is missing from this vast ensemble - people.

There are only two or three of us in this immense townscape. Because this is Ordos, a place that has been called the largest ghost town in China.

Most of the new town buildings are empty or unfinished. The rampant apartment blocks are full of unsold flats.

It is a spectacular example of a new Chinese phenomenon, in many cities - unsold flats, unlet shops, empty office blocks”

If you want to find a place where China's huge housing bubble has already burst, then Ordos is the place to come.

Hande hoche!

Western propaganda.

Cantona's Collars

As we speak,fleets of vans are heading there to help 'recycle' the copper pipes and cables from the empty buildings.

namloc1980

In Communist China the property bubble bursts you!

44leto

Ordos is more in Mongolia then China, if I was Chinese I wouldn't feel comfortable about investing in it either.

Chinese property is OK for now.

ejmaztec

They like to make copies of places found in the West, English towns, and scenic Austrian villages, so perhaps the empty city is a replica of all of the Irish ghost-estates all knocked together?

McTigs

china is different

minidazzler

Yeah, but do Nama own their Ghost Estates? Nope. So they are lucky.

Biggins

There are two apparent sides

http://www.nytimes.com/2010/01/12/world/asia/12china.html?_r=1&scp=6&sq=china&st=cse

Short version:

Many experts see few signs of immediate danger. After all, they note, China has gone on splurges before — building too many steel mills, and too many office buildings — only to see the nation’s breakneck growth sop up the excess capacity. With nearly a billion people still clawing to advance beyond peasant status, they say, China’s growth story has many chapters ahead.

Then there is this where they build loads of ghost cities:

* http://www.broadsheet.ie/2010/12/22/we-have-ghost-estates-china-has-ghost-cities/
* http://www.businessinsider.com/china-ghost-city-documentary-2011-3 (VIDEO)

* Additional video:

https://www.youtube.com/watch?v=rPILhiTJv7E

Bob the Seducer

I have to say, the New South China Mall is my favourite "oops, we didn't really think this one through..." development in China.

The powers that be in China do at least make some effort to cool down the market every so often. Last year Beijing limited the number of properties that families could buy to cut down on investment purchases. Nationally, there were a raft of other new rules introduced around the same time, like increasing the minimum down payment for second homes to 60 percent of the property's value.

http://www.chinadaily.com.cn/china/2011-02/16/content_12028324.htm

Recently, they've been limiting the amount that banks can lend to foreign property investors.

http://www.telegraph.co.uk/finance/personalfinance/offshorefinance/9066684/China-limits-mortgage-loans-for-foreigners.html

starbelgrade

Chinese ploperty.

Cicero

I'll buy that for a dollar...

Yakult

God damn it China, stop spending all the space money!!

policarp

They're all going to come to Athlone next year. . .

FGR

Yakult wrote: »

God damn it China, stop spending all the space money!!

At least Mexico has calmed down on building those water parks.

Freddie59

Biggins wrote: »

There are two apparent sides

http://www.nytimes.com/2010/01/12/world/asia/12china.html?_r=1&scp=6&sq=china&st=cse

Short version:


Then there is this where they build loads of ghost cities:

* http://www.broadsheet.ie/2010/12/22/we-have-ghost-estates-china-has-ghost-cities/
* http://www.businessinsider.com/china-ghost-city-documentary-2011-3 (VIDEO)

* Additional video:

https://www.youtube.com/watch?v=rPILhiTJv7E

The Great Mall Of China.:D

It's amazing that a centre of such size was built, given that the majority of the population actually don't have that much disposable income. Makes you think about the whole Chinese economic miracle really. Shades of the Celtic Tiger?

galwayrush

Bertie obviously gave them advice on his public speaking circus tour...

krudler

Am I the only person who would LOVE to live in a deserted city? no traffic, no people, no queues, long as you had the essentials available itd be great, be like I Am Legend without the vampires.

Freddie59

krudler wrote: »

Am I the only person who would LOVE to live in a deserted city? no traffic, no people, no queues, long as you had the essentials available itd be great, be like I Am Legend without the vampires.

It would have its advantages alright!

44leto

krudler wrote: »

Am I the only person who would LOVE to live in a deserted city? no traffic, no people, no queues, long as you had the essentials available itd be great, be like I Am Legend without the vampires.

LOL I just watched that vid and I feel the same way.

The thing about government is part of their function is to find something for their people to do. I wouldn't worry about this bubble it will be OK as long as the the "small people" are kept out of the market and the Chinese seem to have that policy.

These cities are in a way Keynes public works, they are just to create employment, they could be building Pyramids as the presenter suggested. If I was them I would, that would be so cool.

RichieC

haha, I love watching whitey sweat his balls off worrying about china..

suicide_circus

So is this China or Mongolia? Two separate countries, no?

44leto

44leto wrote: »

LOL I just watched that vid and I feel the same way.

The thing about government is part of their function is to find something for their people to do. I wouldn't worry about this bubble it will be OK as long as the the "small people" are kept out of the market and the Chinese seem to have that policy.

These cities are in a way Keynes public works, they are just to create employment, they could be building Pyramids as the presenter suggested. If I was them I would, that would be so cool.

The Chinese government has shown its people a dream, it is trying to deliver on that with all these new cities.,
It is only a matter of time before they move onto the next stage and conduct a mass migration from the poorer rural areas into these cities giving people housing that was paid for by "speculators" who hoped to make a quick fortune being told to forget it!

The Chinese "export led" economic expansion is nearing an end and will be sustained by internal growth in the future. They will soon drop their support of the US when they no longer need the strong dollar to buy global resources.

Robdude

You are kidding right?

Real estate is one of the most stable investments around. Historically, more millionaires have made their money in real estate than any other industry; and it's far easier to get a mortgage than a business a loan.

Every day the world has more and more people. But the same amount of land. They don't make more land.

I realize some *select* markets around the world have recently experienced a decrease in prices; mostly due to corrupt lenders and greed - but outside of that, real estate is still a great investment. Even in the places where we've seen the largest price jobs; if you look at the 10, 20 or 30 year returns, it's great.

To be honest, if I had the money, I think now would be a great time to buy property in China.

LK_Dave

http://www.spiked-online.com/index.php/site/printable/12023/

1 billion people in Chinese cities by 2030!!

Bob the Seducer

suicide_circus wrote: »

So is this China or Mongolia? Two separate countries, no?

Inner Mongolia, third biggest province in China after Xinjiang and Tibet.

Robdude

Robdude wrote: »

You are kidding right?

To be honest, if I had the money, I think now would be a great time to buy property in China.

You'd lose it all!

http://en.wikipedia.org/wiki/Chinese_property_bubble

http://www.forbes.com/sites/gordonchang/2011/11/06/property-prices-collapse-in-china-is-this-a-crash/

Residential property prices are in freefall in China as developers race to meet revenue targets for the year in a quickly deteriorating market. The country’s largest builders began discounting homes in Shanghai, Beijing, and Shenzhen in recent weeks, and the trend has now spread to second- and third-tier cities such as Hangzhou, Hefei, and Chongqing. In Chongqing, for instance, Hong Kong-based Hutchison Whampoa cut asking prices 32% at its Cape Coral project. “The price war has begun,” said Alan Chiang Sheung-lai of property consultant DTZ to the South China Morning Post.

Robdude

Deleted User wrote: »

You'd lose it all!

http://en.wikipedia.org/wiki/Chinese_property_bubble

http://www.forbes.com/sites/gordonchang/2011/11/06/property-prices-collapse-in-china-is-this-a-crash/

In 2-3 years; yes, I might have 'lost' it all. On paper. But I'd still own the property. And in 20-30 years; I'd be rich.

Robdude

Robdude wrote: »

You are kidding right?

Real estate is one of the most stable investments around. Historically, more millionaires have made their money in real estate than any other industry; and it's far easier to get a mortgage than a business a loan.

You're in a 2006 time warp! Those millionaires were rich on paper, the successful ones cashed out before the bubbles popped, the remainder lost their shirts!

Robdude

Robdude wrote: »

In 2-3 years; yes, I might have 'lost' it all. On paper. But I'd still own the property. And in 20-30 years; I'd be rich.

In China, do you really consider whether they'll honour the property rights, after all it's a communist country!

af_thefragile

How does just building big buildings cause economic growth??

Red Hand

af_thefragile wrote: »

How does just building big buildings cause economic growth??

If you build it, they will come.

af_thefragile

Red Hand wrote: »

If you build it, they will come.

But no one seems to be coming...

44leto

Robdude wrote: »

In 2-3 years; yes, I might have 'lost' it all. On paper. But I'd still own the property. And in 20-30 years; I'd be rich.

I actually went as afar as an Irish expo for property sales in Shanghai, they were 3 bedroom apartment in the dock area for 80 grand. Shanghai property prices has taken off like a rocket.

I kept asking what are your property rights in China, the sales people (Irish) gave answers that were circumspect to say the least.

You have basically none, I didn't buy, so now I could either be a millionaire or have f/all. I somehow think the later was more probable. I don't regret it either way,

Bob the Seducer

af_thefragile wrote: »

But no one seems to be coming...

In some places it seems as though developers have gone;

"There are lot's of migrant workers...
Migrant workers like moving to cities...
Lets build a city!"

At that point, it might have been appropriate for someone to point out that the migrant workers (as the term suggests) are moving to work. There needs to be jobs, industry and at least a certain level of services to attract people to your new "city". Also, migrant workers can't afford to buy property - at least initially, so what they're looking for is a cheap place to rent not a penthouse apartment.

Governments can create new city projects far easier than property developers because they have the power, for better or worse, to encourage investment and relocation through whatever means they see fit.

The BBC did a feature on one of the new government sponsored cities a year or two back. It only took about four years to turn a rural village into Wuxi New Town.

http://www.bbc.co.uk/news/world-asia-pacific-11863108

Freddie59

Bob the Seducer wrote: »

"There are lot's of migrant workers...
Migrant workers like moving to cities...
Lets build a city!"

So, like Ireland, they are building houses to house those building them........

Freddie59

Robdude wrote: »

In 2-3 years; yes, I might have 'lost' it all. On paper. But I'd still own the property. And in 20-30 years; I'd be rich.

Or dead.

Pottler

best posts yet have to be "chinese ploperty" and "great mall of china". I wonder can you see the mall from space?:D The chinese love making stuff nobody needs anyway, it's a way of life for them. Plastic ducks/apartments in the ar5e of nowhere, sure it keeps em busy, and some fool will buy them if they are cheap enough.