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Ordos, China: The World’s Largest Ghost City (2014)

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Re: Ordos, China: The World’s Largest Ghost City (2014)

#21

Post by cthalupa »

presty wrote: post #9

isn't all this just a matter of time? https://www.bullionstar.com/blogs/koos-jansen/guest-post-5-c... http://blogs.reuters.com/great-debate/2015/04/21/the-myth-of...

This is probably the most relevant comment in the thread.

These ghost cities start that way, but they all end up being populated, and as soon as the flood gates open, they fill up fast. It just takes certain factors reaching critical mass to push them from the 'No one is living there' to 'Everyone is moving in and filling the entire place up'

Edit: Looks like it's already begun in Ordos as well. http://tmagazine.blogs.nytimes.com/2015/03/06/ordos-china-to...

As usual, the initial settling is largely happening due to the Chinese government applying artificial levers to get people to move there, but that's a tactic they've used successfully on a lot of these "ghost towns"

Re: Ordos, China: The World’s Largest Ghost City (2014)

#22

Post by seanmcdirmid »

pavlov wrote: post #19
dm2 wrote: post #16

"Typical housing prices in Kangbashi have fallen from $1,100 to $470 per square foot, over the last five years alone." Why are the prices so high? Obviously nobody wants to pay $500k - $1 million for a 1,000 sqft. apartment in a Chinese ghost town.

That does seem insanely expensive. Maybe the price was quoted in $/m^2 and the unit was mistakenly switched to square feet at some point? An alternative explanation is that the owners of these houses don't really want to sell them at all for some reason. Maybe keeping the money tied in unsold real estate is somehow preferable to having cash or other assets, due to e.g. government housing subsidies or something?

Nobody wants to take a loss on real estate in China, so they'll just wait until the market is better or they get compensated by the government when they eventually "redevelop" the land (those apartments only have an effective 10-20 year lifespan given quality of current construction methods). They don't take out big loans to buy these places, so there is no liquidity pressure. This is good and bad, no housing market crash but a huge zombie market of low turn over of second hand housing even in much more active first tier cities.

Re: Ordos, China: The World’s Largest Ghost City (2014)

#23

Post by seanmcdirmid »

nate_meurer wrote: post #17
jimrandomh wrote: post #15

It may seem weird to have almost-empty cities, but from a different perspective, a city like that is an amazing resource. If China ever has disaster or other crisis that creates lots of refugees (think Hurricane Katrina), they have a functioning city with lots of space ready for people to go to. Which is pretty awesome, when you think about it.

But these don't really make very good "backup" cities. The housing isn't owned by the government. It's owned by investors, often individuals, and it serves as a sink for money that has nowhere else to go. Real estate and construction investment of this kind is one of the big drivers of the Chinese economy. If the government confiscates property on the scale you're talking about -- even if it's in response to a disast…

Not to mention it's the upper middle class and rich who owns these places...the one class the government really doesn't want to piss off.

Re: Ordos, China: The World’s Largest Ghost City (2014)

#24

Post by vorg »

pavlov wrote: post #19
dm2 wrote: post #16

"Typical housing prices in Kangbashi have fallen from $1,100 to $470 per square foot, over the last five years alone." Why are the prices so high? Obviously nobody wants to pay $500k - $1 million for a 1,000 sqft. apartment in a Chinese ghost town.

That does seem insanely expensive. Maybe the price was quoted in $/m^2 and the unit was mistakenly switched to square feet at some point? An alternative explanation is that the owners of these houses don't really want to sell them at all for some reason. Maybe keeping the money tied in unsold real estate is somehow preferable to having cash or other assets, due to e.g. government housing subsidies or something?

> "Typical housing prices in Kangbashi have fallen from $1,100 to $470 per square foot, over the last five years alone."

> Maybe the price was quoted in $/m^2 and the unit was mistakenly switched to square feet at some point?

May make sense since the m^2 prices would be the more rounded $12,000 and $5,000. Though it's also likely the price was also switched from RMB to $.

Re: Ordos, China: The World’s Largest Ghost City (2014)

#25

Post by [deleted] »

deoptimo wrote: post #20
nate_meurer wrote: post #18

Earlier quoted context omitted.

It only makes sense if the backup cities are already owned by the government. If populating those cities post-disaster requires government appropriation of an entire city's worth of private real estate assets, the resulting financial and political instability could well dwarf anything wrought by the original disaster.

So you think that the appropriation of unused real estate is worse than whatever disaster led to the mass exodus of a population from a major city. Interesting, but that is not how I think.

[deleted]

Re: Ordos, China: The World’s Largest Ghost City (2014)

#28

Post by guard-of-terra »

seanmcdirmid wrote: post #22
pavlov wrote: post #19

Earlier quoted context omitted.

That does seem insanely expensive. Maybe the price was quoted in $/m^2 and the unit was mistakenly switched to square feet at some point? An alternative explanation is that the owners of these houses don't really want to sell them at all for some reason. Maybe keeping the money tied in unsold real estate is somehow preferable to having cash or other assets, due to e.g. government housing subsidies or something?

Nobody wants to take a loss on real estate in China, so they'll just wait until the market is better or they get compensated by the government when they eventually "redevelop" the land (those apartments only have an effective 10-20 year lifespan given quality of current construction methods). They don't take out big loans to buy these places, so there is no liquidity pressure. This is good and bad, no housing market…

"those apartments only have an effective 10-20 year lifespan"

Economical or political crisis hits, and they'll have to live in those apartments for 50+ years. We've been there already.

How do you build an apartment block these days anyway so it just lasts 20 years? With modern materials it's a bit unexpected.

It's a royally crappy idea anyway. Imagine selling one of those apartments to a person aged 40, who then promptly retires and have to live 20 years in a crumbling home or lose one and go homeless.

Apartment is supposed to be a solid investment.

Re: Ordos, China: The World’s Largest Ghost City (2014)

#29

Post by ics »

guard-of-terra wrote: post #28
seanmcdirmid wrote: post #22

Earlier quoted context omitted.

Nobody wants to take a loss on real estate in China, so they'll just wait until the market is better or they get compensated by the government when they eventually "redevelop" the land (those apartments only have an effective 10-20 year lifespan given quality of current construction methods). They don't take out big loans to buy these places, so there is no liquidity pressure. This is good and bad, no housing market…

"those apartments only have an effective 10-20 year lifespan" Economical or political crisis hits, and they'll have to live in those apartments for 50+ years. We've been there already. How do you build an apartment block these days anyway so it just lasts 20 years? With modern materials it's a bit unexpected. It's a royally crappy idea anyway. Imagine selling one of those apartments to a person aged 40, who then prom…

"Modern materials" doesn't necessarily mean the most durable or well-suited to the task. It typically means cheap to produce (therefore readily available) and visually... acceptable.

Re: Ordos, China: The World’s Largest Ghost City (2014)

#30

Post by iiiggglll »

cthalupa wrote: post #21
presty wrote: post #9

isn't all this just a matter of time? https://www.bullionstar.com/blogs/koos-jansen/guest-post-5-c... http://blogs.reuters.com/great-debate/2015/04/21/the-myth-of...

This is probably the most relevant comment in the thread. These ghost cities start that way, but they all end up being populated, and as soon as the flood gates open, they fill up fast. It just takes certain factors reaching critical mass to push them from the 'No one is living there' to 'Everyone is moving in and filling the entire place up' Edit: Looks like it's already begun in Ordos as well. http://tmagazine.blog…

Sound like China is planning ahead. Contrast this with the American problem of nothing new being built:

http://www.bloomberg.com/news/articles/2015-05-07/here-s-how...

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