A Fifth of China’s Homes Are Empty (2018)

In this case, I think the system perfectly justifies having 50m homes empty. If you look at it another way, if San Francisco (arguably another booming localized economy) had the same initiative to build a 20% buffer for housing, it would be seen as a progressive, citizen minded effort to create affordable housing and a huge benefit to the community.

As China, I'd much rather face the problem of building empty homes (which is not really a problem?) than face the population revolting from huge spikes in cost of living due to not enough urban housing. SF is full of rich enough people to ignore the struggles of the working class - China probably isn't.

edit: I also don't think the rise in 2nd or 3rd home purchases is an issue, it's more of a symptom of the growing divide between rich and poor, especially in China.

Go to a mall right next to Huangpu river near Lupu bridge mostly empty for last 10 years built by Greenland (it's the main downtown area). As others pointed out most of these homes and commercial ventures are waiting for price rises to sale and are seating empty. This narrative of urbanization is pretty old, now it's impact is very little in city like Shanghai.

At present across China there is price but no buyers. People are holding on to real estate until they get atleast bit more than what they bought. On the other hand people's saving has already been consumed by SOE and govt spending. So the only way to prop up economy is to print money like USA. As long as other countries do not want RMB to depreciate, they can print money and prop up the economy.

3. Many of the ghost districts never fill up before they are torn down as eye sores. Kangbashi will only fill up if coal makes a big come back, which is highly unlikely. Tianjin financial district is mostly a bust so far, but a derelict building or two for a decade is not abnormal.

The problem is really simple: China lacks a property tax, so housing is seen as a speculative investment rather than just a place to live in. And China is not wanting for speculators.

- New construction condos are a better investment proposition than in the West because (1) there's no property tax, and (2) other types of investments are less reliable (e.g., stock market is rigged) - There's a cultural aversion to 'used' things, which explains why an investor might prefer to let a condo sit empty instead of rent it out. - Because they're seen as an investment, some new construction is actually built with the intention of selling directly to investors.

So they can stop a lot of rampant speculation through a variety of measures, meaning hopefully, they can kill any bubble-like blowups.

As you say, there's a lot of poor folks and a lot of empty homes, maybe that does mean a haircut for home owners, but it might possibly be done in a way that doesn't cause any bursting bubbles.

So long as there is something to underpin reality (like ex-poor people wanting homes) they can make a soft landing for all of this.

The more existential concern is: 'what then'?

The path has never been so uncertain.

My theory is that many developing countries use the wrong metric to gauge their success, looking to count their skyscrapers or their advanced techno-cities but fail to see that the success of "developed" countries lies more in their justice and governance systems.

It really doesn't. That is until you visit there again in 3 - 5 years times. Everything is different. You start getting lots more people and spending money. Ok it is not like everyone becomes wealthy overnight. But from Zero to having a few people actually buying, shopping and eating in these malls is quite an achievement. And they move from bottom class Third Tier cities into upper class Third Tier etc...

I have seen it, it is a little hard to comprehend. I still don't know how everything was possible.

I've seen similar stuff in vacation destinations in Turkey and Greece; poorly developed areas next to a road (think just bare rock and shrubs) with a super fancy looking fur coat shop. Fur coat shops, in 35+ degree C weather. I want to believe they get the odd rich Russian coming over from time to time, but TBH they're probably money laundering fronts.

New neighborhoods the size of downtown San Francisco, and barely anyone around. A few police, the odd person riding a bike, but otherwise you could throw a bowling ball down most streets and not hit anything.

The more I thought about it, the scarier it became. This is a bubble that makes all before it look insignificant in comparison. The question is whether the government can guide it into a soft crash landing.

I constantly hear about China being an econ powerhouse, the future of the world, everyone wants access to their huge middle class, etc. But for my one week visiting Beijing and Shanghai I was confused to say the least.

The most impactful thing I have ever seen was on the high speed train between Shanghai and Beijing (about 5 hours at 190 mph) and I have never seen more highrise apartments completely empty in my life. In fact, at some points, I would look out the window and see over 200 of the exact same highrise perfectly spaced and all very clearly empty. I would say a lower bound on the number of 20+ story apartments I saw in 5 hours is somewhere around 10,000. I could be off, but I was pretty attentive to it the entire ride. Most of them were empty(given the lack of any humans, vehicles, or clothes on the balcony around them).

The wildest thing was seeing some of these highrises plopped in the middle of a farm. Nothing around, not even a cement road, and just an unoccupied apartment, 20 floors tall, surrounded by fields of whatever crop it was.

I started to hypothesize that the massive construction SEO's in China were used to subsidize jobs for rural workers and nothing else. It seems like construction would be a good industry to try to bring lesser educated and rural populations to higher wealth due to the high need of labor. This is total speculation so please don't blast me, but it seems possible.

Anyways, I was shocked at seeing this and I wonder if anyone can add other anecdotal evidence of something like this in another Chinese region. The great wall was pretty cool though:)

> In 2012, I traveled for about 6 weeks in China.

Six weeks staying in China means nothing. China is already the 2nd largest economy but it still develops at an unprecedented rate. Urbanization in the country only reach 60% and will increase to 90% in 2030. 'Ghost cities' and empty malls will be filled very quickly in the next 3-5 years. There's actually a shortage of malls/supermarkets/schools in most communities in China, and that's the reason why e-commerce prevails and companies like Alibaba are reinventing retail.

> So pretty much everything I read about China's economic development, I don't believe.

You shouldn't, especially if you only read reports from Western sources, which are heavily biased and often telling only what people prefer to hear. People in the States are either ignorant on what's going in China, or so entitled to think there's only one way for how societies work.

https://www.theamericanconservative.com/urbs/what-it-actuall...

As that notes, there are significant deficiencies in a lot of the cheap housing stock in lower-opportunity areas that need money to fix. Those properties going unoccupied can still be an issue, but it’s different from speculation on new property. Vacancy rates in high-opportunity US cities are very low.

From what I’ve heard, the situation in China sounds like speculation on new properties, rather than aging housing stock that requires significant reinvestment.

I grew up in Lake Tahoe , and having gone up recently for my Dad's memorial - and talking to some of the wealthiest realtors in the region - coupled with how areas of tahoe are literally banning AirBnB - they have a crap ton of "vacancies"

But its not like these are not owned-homes - they are just not lived in/abandoned.

Basically, the homes were bought in the past decades for fractions and either rebuilt/remodeled such that now there are +++% of the homes which are +Million$ vacation homes.

The problem with this is that it happened so densely so quickly, that the idea of running a small business in Tahoe City is tough due to lack of traffic as well as lack of workers - as you cant have workers who have no place to live...

Is there a global institute for urban planning who is attempting to address some of these issues.

In dealing with the local cannabis regulations across every county in California, and the local city planning department jurisdictions within these... my take-away is that its a ridiculously fragmented understanding of both problems and the solutions.

https://www.statista.com/statistics/183635/number-of-househo...

Also, the state of some of these buildings is worth noting - Much like Nail Houses, there's a significant portion of these developments that were made to sell for investment purposes alone, and are not going to be suitable for habitation.

Now I look back, China really will be the next super power. The management and controlling are simply on a different dimension.

China is wise to have extra housing capacity. Even if they are 'nail houses' ... they only have to beat sleeping in the streets.

Edit: Given this - it seems like China might be able to more easily absorb this many apartments being put on the market. One could imagine a lot of people entering a modern world where they wouldn't live with their parents (or child).

In a "us knows us" world, the big loans are given to people approving the regime.

The loan is 10 million for example, the collateral is the property.

The loan is 50% used and defaults.

5 million profit.

Some articles around shadow banking, if you want to look it up

You've probably heard that your new car loses most of its value (that is, most of the value it will ever lose) the minute you drive it out of the dealership. The label "new" is worth much more than the functionality.

This can also be true of apartments. I have seen it written that it is true of Chinese apartments, though I can't personally attest one way or the other.

Would you be interested in renting a 400 sf dilapidated teardown shack in western Kansas, no utilities, five hours from the nearest big city, no local jobs, and not near anything of consequence?

As young Chinese flock to the large cities, they might have grown up in something similar to the above, but just because they're leaving it behind doesn't take it out of the housing stock.

That's perhaps a bit of an oversimplification, but a good number of that double digit percent is abandoning the rural lifestyle held over from the cultural revolution.

For monopolies yes. But for commodities, you have to go with the market rate - best value product wins the sale.

Maybe the Bay Area is so absurdly expensive that a boat is a good investment, but I would be highly dubious about it myself.

You can probably save some considering how expensive the bay area is, but you're also living in cramped quarters with downsized appliances (which I guess is normal for the bay area :P). Also, boat showers really suck.

King Canute should just decree that the tide is to go out.~

No matter how you structure the law, the capacity of property speculators to evade its intent will likely exceed the government's ability to enforce it, especially when some of those speculators are government officials.

I foresee that a vacancy tax would be avoided by building apartment buildings that are only 80% finished, or whatever the law threshold may be, such that they do not qualify as vacant housing units, but can still be brought onto the housing market more quickly than erecting a new building from the foundations.