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Comment by beilabs | Hacker News Reader

Lived in a ghost estate in Dalian, China for about 2 years. Could have loud music and parties and was never really bothered by anyone. Moved to Beijing, real estate in 2007 was at a premium. Its even more so now since the Olympic games. Apparently prices have risen dramatically, the demand is incredible.

The same cannot be said for the rest of the country. Many apartments are owned by companies anticipating renting the rooms to their workers. One of the buildings I was initially staying in was a dorm room sharing with other developers in my team. With wages so low it was difficult if not impossible for many of them to afford an apartment.

Many other apartments are owned by overseas Chinese, investing in their locality, awaiting their return.

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My wife is from Dalian. I've spent a lot of time there, -nice city.

I just returned from Shanghai and Sanya. There are a lot of dark apartments in Shanghai at night. I know a few Chinese who own multiple apartments, some more than 10, most of these are empty. There are limits to how much they can invest overseas, and I believe investment in real-estate is greatly increased by this.

I feel they have a real-estate bubble of incredible proportions. Everyone talks real-estate too much, and there are too many advertisements for new developments. I don't think this will end well.

I live in China right now, Shenzhen. It's amazing to see how many real estate agencies there are here. Every single street corner has one, they're more prevalent than any fast food chain. Inside each agency, there are maybe four to a dozen people working. All trying to sell apartments.

One of my friends is a real estate agent. She told me recently that she and a friend had purchased a condo.

Me: Oh, so you're going to move in there soon?

Her: No, no.

Me: Oh, you're renting it out to tenants?

Her: No, no. If someone lives in it, then the value goes down. So we're going to keep it empty and then sell it next year or in a couple of years.

This cannot end well.

My understanding is that there's no property tax in China [1] which makes holding empty property a lot more attractive than it is here.

[1] I lived in China for years, but I learnt that here: http://yglesias.thinkprogress.org/2010/06/china-eyes-propert...

Serious question: how do I buy a Chinese credit default swap?

I don't believe it is possible. I've considered alternate ways of leveraging this. Right now the Australian dollar is supposedly propped up high by selling commodities to China: http://www.ibtimes.com/articles/128654/20110330/australian-d... That seems one way for a non-Chinese investor to put chips on that number.

Geez investing is so cynical. :/

Anybody know what Michael Burry's up to these days?

You could also short our two big mining companies, BHP Billiton and Rio Tinto.

But most of China's raw materials importing is driven by their huge expert market, how would a collapse of domestic spending affect that? Isn't it everyone else that's buying Chinese goods that's driving the demand for resources?

China already has a large and fast-growing domestic market.

Insofar as they want to build apartment blocks and manufacture cars for Chinese consumers, the Chinese need steel. For that they need iron ore, and for iron ore Australia and Brazil are the main sources.

> I feel they have a real-estate bubble of incredible proportions.

It's bad, but I think it seems worse than it is. Reason is that in East Asia buildings that have been lived in are considered "used" and therefore less valuable than a new one. So whereas in the West an investor would get himself a little pocket money by renting his building out, in the East they keep it empty to keep its value up.

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