Tuesday, October 19, 2010

China's Ghost Town Cities

In China, a City but No Residents
Analysts estimate there could be as many as a dozen other Chinese cities just like Ordos, with sprawling ghost town annexes. In the southern city of Kunming, for example, a nearly 40-square-mile area called Chenggong has raised alarms because of similarly deserted roads, high-rises and government offices. And in Tianjin, in the northeast, the city spent lavishly on a huge district festooned with golf courses, hot springs and thousands of villas that are still empty five years after completion.

A heavy tax only on unoccupied properties to force speculators to find a renter that would help curb flipping and would force occupancy to rise in these ghost cities.

More generally, how does this all end? This is a much bigger bubble than, say, California. And it's in a market that, outside Hong Kong, doesn't know what a bubble and crash look like. How will the populace react?
Will China relax the one-child policy in an effort to reduce the housing overhang?
A centrally planned economy has unprecedented tools for attempting to deal with the aftermath, but given their limited success with controlling the ongoing build-up, it's going to be trial and error figuring out what works, in a very short time frame. The people's confidence better be running high.

Does forceable relocation still work when, increasingly, real money is involved?

After it finds itself the owner of all this, will the government simply give the apartments away in a lottery with a residency requirement?

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