Nouriel Roubini on the investment bubble in China, including these ghost towns:
China: High GDP, 64 million empty apartments.
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Re: China: High GDP, 64 million empty apartments.
#12Ghost cities also keep construction workers employed.
Re: China: High GDP, 64 million empty apartments.
#13How many apartments are vacant in the US, just as a comparison, does anyone know? That would make the number much more meaningful. Also, are these apartments dirt cheap and do they speak english in these areas at all? Maybe they could be a haven for startups, which are somewhat less bound by geography, if they were extremely cheap. I might just be dreaming though.
You may be dreaming, but you're not the only one.
What would be the hurdles to get a startup running in China? The Great Firewall?
It's a big country so it's always possible to find a place that fits your personal taste. For example Sanya is a tropical island. Not much infrastructure there yet though.
Re: China: High GDP, 64 million empty apartments.
#14How many apartments are vacant in the US, just as a comparison, does anyone know? That would make the number much more meaningful. Also, are these apartments dirt cheap and do they speak english in these areas at all? Maybe they could be a haven for startups, which are somewhat less bound by geography, if they were extremely cheap. I might just be dreaming though.
Try Phonm Penh (Cambodia). You can buy an apartment for $30k in a premium location. If you can't afford to buy, you can rent something decent for $60 a week or less. Food is about a third to half the price of what you're used to paying. Western standard places that are great to work in are springing up quickly now. Very friendly place. A lot of people speak English. Many of them have an entrepreneurial mindset (and run or dream of running some sort of small business). If you've got an interesting enough resume and want to check it out, feel free to ping me and I'll show you around (and depending on the state of the renovations you can stay one of my spare rooms).
Re: China: High GDP, 64 million empty apartments.
#15Nicely done video, but I think it gets the story wrong. The bubble is not illogical to start with. Thanks to currency controls most people have no way to invest outside China. The Shanghai stock market meanwhile has huge problems with adverse selection (bad companies pay to list -- successful companies list in Hong Kong or the United States). There are no property taxes in most of China, so people with money park it…
This is mostly what happens.
Additionally, these new apartment complexes are often build in "new areas" of the bigger cities, to grow the city. China is trying hard to reach a level of urbanization comparable to the west, so they need to "grow their cities" somewhat aggressively.
I have lived in two of those newly build complexes myself. First there is not much around, roads, maybe a supermarket and a few stores. The local gov't or the developer offer the shop owners rent-free for a year or two to get them to set up their stores in the new area, because there are almost no people yet. But two or three years later, the apartments are mostly filled (either rented or sold) and the shops are paying rent too, new supermarket have arrived, and suddenly the area has become part of the city center.
Same goes for big roads. In the southern part of the town I live in, there is a huge road grid (6 lane roads, etc) already build, but there is only grassland. Come back in five to ten years, and it will be inner city area. Smart to finish the roads before it is crowded.
Re: China: High GDP, 64 million empty apartments.
#16How many apartments are vacant in the US, just as a comparison, does anyone know? That would make the number much more meaningful. Also, are these apartments dirt cheap and do they speak english in these areas at all? Maybe they could be a haven for startups, which are somewhat less bound by geography, if they were extremely cheap. I might just be dreaming though.
Depends on the city. In the city I live in, apartments cost the same as in Germany, but with worse quality. But prices go down drastically in the countryside (because nobody wants to live there).
Re: China: High GDP, 64 million empty apartments.
#17How many apartments are vacant in the US, just as a comparison, does anyone know? That would make the number much more meaningful. Also, are these apartments dirt cheap and do they speak english in these areas at all? Maybe they could be a haven for startups, which are somewhat less bound by geography, if they were extremely cheap. I might just be dreaming though.
You may be dreaming, but you're not the only one. What would be the hurdles to get a startup running in China? The Great Firewall? It's a big country so it's always possible to find a place that fits your personal taste. For example Sanya is a tropical island. Not much infrastructure there yet though.
Great Firewall? Use a VPN, easy. (I'm doing it for many years).
Sanya is not an island, its a city on the island of Hainan.
Infrastructure in China is very good, especially train lines.
Re: China: High GDP, 64 million empty apartments.
#18Would it not work if they did what Henry Ford was doing. Price them so the workers can buy them? That way the money stays in your pockets while the workers enjoy a better life? Win-Win.
Re: China: High GDP, 64 million empty apartments.
#19>> There are no property taxes in most of China, so people with money park it in real estate. Exactly the case in India. Most people there park money in real estate. Also in the suburbs the official land value (determined by govt) is far less than the real market value. So investing in that kind of land is way to park black money (or corruption money). The usual real estate factors like rent-to-own don't apply, Infac…
>> There are no property taxes in most of China, so people with money park it in real estate.
There are now in Shanghai, Beijing and a few other major cities. That's quite new and started just this year.
Re: China: High GDP, 64 million empty apartments.
#20Would it not work if they did what Henry Ford was doing. Price them so the workers can buy them? That way the money stays in your pockets while the workers enjoy a better life? Win-Win.
The problem is the expenses in building these things are capitalized (or worse, booked at a greater value), so when they do sell at the much lower value, the developers/banks/government will need to take a loss. So long as the selling can be delayed, the losses can be hidden. If these were just private entities, they'd take the losses and go on, but the government purse is much larger.