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

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

#111

Post by paulie_a »

Arn_Thor wrote: post #100
seanmcdirmid wrote: post #92

Earlier quoted context omitted.

That is naive. Many of those properties are built in places where they won’t fill up: coal mining towns that are on the decline, 3rd and 4th tier cities that barely qualify as urban, 40 miles away from the nearest job in a second tier city. Yes, you can buy way outside the sixth ring road, but they have no buses or subway, what will you do, drive?

Sure, not every single project is going to succeed. But the government is executing a long term strategy. Rather than a few extremely large megacities, the plan is to boost mid-tier cities and the small towns that connect them. So a lot of these small towns that don't have anything going for them right now will be connected in time. Spending on building out infrastructure continues. Remember the photos from a few yea…

When did that change? They were incredibly trying to cultivate and outright force mega cities.

Leaving behind mega cities that are empty. Hell if you want to play out a pretend version of "I am legend" you could get pretty close. (Minus the zombies)

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

#112

Post by paulie_a »

lph wrote: post #96
ksec wrote: post #66

To put things into context. 1. These are Urban Homes. 2. There are roughly 20M people jumping to new cities and Urban areas every year. For years China has keep a roughly two years buffer zone, I think the rate of new housing is the same and rate of people going into Urban has declined, so a slight increase in terms of buffer ( closer to three years now ). 3. Most of the "Ghost Cities" do get fill up quickly, once th…

There are a few more factors that are unique to China's situation: - 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 th…

Letting an empty condo sit and later, much later sell is not new.

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

#113

Post by thaumasiotes »

james_s_tayler wrote: post #75
gruez wrote: post #62

Earlier quoted context omitted.

That's deprecation, and it's super fast in things like cars and consumer electronics. However, as far as I know, homes do not deprecate rapidly (ie. a "brand new" house doesn't command a significant premium over a comparable 1 year old house)

Homes depreciate rapidly in Japan. It's a cultural thing. They value newness.

> It's a cultural thing. They value newness.

This is also true in China. Shrink wrap is left on things indefinitely so that they will appear to be new. I've seen it happen on things ranging from doorknobs (already installed on the door) to board games (opened and played, but with the shrink wrap carefully preserved to fit over the lid).

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

#114

Post by Arn_Thor »

paulie_a wrote: post #111
Arn_Thor wrote: post #100

Earlier quoted context omitted.

Sure, not every single project is going to succeed. But the government is executing a long term strategy. Rather than a few extremely large megacities, the plan is to boost mid-tier cities and the small towns that connect them. So a lot of these small towns that don't have anything going for them right now will be connected in time. Spending on building out infrastructure continues. Remember the photos from a few yea…

When did that change? They were incredibly trying to cultivate and outright force mega cities. Leaving behind mega cities that are empty. Hell if you want to play out a pretend version of "I am legend" you could get pretty close. (Minus the zombies)

This animation by McKinsey shows a number of different paths for urbanization. There are many neuanced models, but they commonly divide into "supercities", "hub and spoke" and "distributed growth". https://www.mckinsey.com/tools/Wrappers/Redesign/Interactive... Quote from a related 2009 report called "Preparing for China's Urban Billion": "China's current urbanization path will show a pronounced expansion in the number of midsized cities across the country. Although China today has two megacities [Shanghai and Beijing] and a number of prominent hub-and-spoke systems [...] many midsized cities are growing in parallel and will become more and more relevant in the national landscape."

Now, I haven't done any close reading on this for the past few years, but back in 2014 or so the consensus among China-watchers was that the government both in policy and in action had clearly staked a path somewhere between the "hub and spoke" and "distributed growth" models. The high speed rail network is an important part of this, creating economic hot spots along the path between existing supercities. In fact, in the intervening time they have disincentivized further growth of Shanghai and Beijing, and is creating a new administrative city south of Beijing and west of Tianjin rather than expanding each of those two supercities.

I have no idea what empty megacities you're referring to...

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

#115

Post by kartickv »

rmrm wrote: post #65
kartickv wrote: post #60

The government should make a law saying that houseowners shouldn't keep a house empty if there's someone offering even a single rupee or yuan a year, plus paying the insurance premium to protect the homeowner from any damage done by the tenant, plus deep cleaning to restore the house to a rentable condition when the tenant leaves. A landlord cannot keep the house empty if there's at least one person offering the abov…

This would certainly eliminate the rental market altogether, if that was your goal.

You haven't explained why that would happen, nor has any of the downvoters.

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

#116

Post by FooHentai »

Arn_Thor wrote: post #86
FooHentai wrote: post #22

Earlier quoted context omitted.

Maybe, if you consider that trend line to be a stable one that'll just keep progressing upwards on the chart. But that doesn't seem to be a sure thing. 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.

Source on that, please. Sure, the construction work can be shoddy (though it's improved a lot in the last five years, and unsold property in CHina right now is usually younger), but it's absolutely livable

"Immediately above us towered what could have been the headquarters of a bank — forty floors of office space, wrapped in a shell of mirrored panels. In its un-maintained state however, these reflective scales were falling away in great swathes, to expose the bare concrete beneath. Not even finished yet, and already it needed a makeover."

https://www.gizmodo.com.au/2014/03/welcome-to-the-worlds-lar...

"the farmers that own the land here get the cheapest materials, and make these pop up out of nowhere": https://www.youtube.com/watch?v=BcyYyyaPz84&t=666

Follow-up video "Are new chinese buildings really falling down?": https://www.youtube.com/watch?v=XopSDJq6w8E tl;dr yes. Note at 2:30 "We saw this place being built three years ago".

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

#117

Post by ksec »

anovikov wrote: post #107
ksec wrote: post #66

To put things into context. 1. These are Urban Homes. 2. There are roughly 20M people jumping to new cities and Urban areas every year. For years China has keep a roughly two years buffer zone, I think the rate of new housing is the same and rate of people going into Urban has declined, so a slight increase in terms of buffer ( closer to three years now ). 3. Most of the "Ghost Cities" do get fill up quickly, once th…

Well some people are going to always stay in rural areas right? China will still have some agriculture.

Yes and true. But I mean 500M in rural is 30% more than the total US population. With modern technology there are very little need for hundreds of millions people in agriculture. There are billions of funding to help farmers modernise their tools, drones and machines doing the work. ( Although that has not been working so well, turns out Machine Learning, Drones, or other tech can only do as much when your soil is pretty much in a shit state )

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

#118

Post by ksec »

spyckie2 wrote: post #80
ksec wrote: post #66

To put things into context. 1. These are Urban Homes. 2. There are roughly 20M people jumping to new cities and Urban areas every year. For years China has keep a roughly two years buffer zone, I think the rate of new housing is the same and rate of people going into Urban has declined, so a slight increase in terms of buffer ( closer to three years now ). 3. Most of the "Ghost Cities" do get fill up quickly, once th…

Articles about ghost cities are a fascinating read - sometimes exploring un-intuitive facts, like having 50m empty homes in China, yields a surprising discovery of the underlying systems. 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…

That is actually quite a large difference. China deliberately build ghost towns and pull in lots of people into urbanisation. If they had build a 20% buffer zone in Shanghai, I don't know how many will try and rush to that places and causes all sort of problem.

The SF problem is a lot like HK. There are far too many parties invested in property, therefore it is their interest to keep property building low and push the price as far up as possible. Government being extremely slow to react and by the time they do, those parties will try to delay it for so they have time to offload their asset.

The only way to go about it, is to build Satellite cities and try to move people out of it. Which in US is easier said than done.

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

#119

Post by bobthepanda »

adrianratnapala wrote: post #94
seanmcdirmid wrote: post #90

Earlier quoted context omitted.

2. There are empty homes in 10 year old complexes in Beijing and Shanghai. 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 h…

Why is it seen as a better speculative investment than other opportunities. After all, someone is left holding the bag when the investment is found to be unused -- which is a cost just as much as a tax would be. What other considerations are outweighing that cost?

China controls how capital can leave the country. There is a lot of money just sloshing around within China hungry for investment. And the financial sector is relatively underdeveloped with a volatile stock market.

As a result, Chinese money loves chasing bubbles in search of returns, like P2P lending and crypto.

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

#120

Post by tCfD »

m4x wrote: post #59
randomacct3847 wrote: post #53

I’ve heard the best housing “hack” for the Bay Area is to live in a houseboat. Anyone doing this or calculated how much you’d save?

I have a close family member who did this in Auckland, NZ and it certainly didn't save them any money. The main issue was that boats are expensive to keep afloat and maintain, and depreciate in value over time (unlike a house). Maybe the Bay Area is so absurdly expensive that a boat is a good investment, but I would be highly dubious about it myself.

"a boat is a hole in the water that you pour money into"
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