Monday, October 31, 2011

Wen Yet Again Reiterates There Will be No Easing of Curbs

China actually seems to grasp that blowing the bubble up more only means a harder landing later.
Hong Kong Stocks Fall as Wen Says China Will Keep Property Curbs
Industrial & Commercial Bank of China Ltd. slumped 1.6 percent after Premier Wen Jiabao said China will “firmly” maintain restrictions on the real-estate market.

Wednesday, October 26, 2011

Boomer Housing Stats Australia

Grey cloud gathers over housing market
Despite representing only 25 per cent of Australia's population and 38 per cent of households, the baby boomers collectively hold 49 per cent of Australia's housing assets.
The baby boomers collectively own 46 per cent of owner-occupied housing assets, 7 per cent of which is made up of housing debt. In comparison, the baby boomers hold 57 per cent of "other" dwellings, 14 per cent of which comprises housing debt.
In fact, a recent survey of people aged over 60 found that 22 per cent are "very likely" and a further 10 per cent "likely" to sell their homes and buy a smaller property to fund their retirements. By contrast, there was very little support for the third and fourth options above, selling and renting or taking out a reverse mortgage.
According to Australian Taxation Office (ATO) data, 78 per cent of property investors are lower-to-middle income earners (i.e. they earn less than $80,000 a year) and three-quarters of these investors are negatively geared - i.e. losing money and investing purely for capital gain.
There is, therefore, the risk that the baby boomers will soon switch from net buyers to net sellers of investment properties due to the low yields on offer (about 3 per cent after costs) and, in the case of boomers who are negatively geared, the inability to claim tax deductions against other income once they cease working.

Tuesday, October 25, 2011

Homeowners in Shanghai Smash Showroom to Protest Falling Prices

Shanghai Homeowners Smash Showroom in Protest Over Falling Prices
A group of around 400 homeowners in Shanghai demonstrated publicly and damaged a showroom operated by their property developer after the company said it cut prices. Home buyers had wanted to speak with the developer to refund or cancel their contracts but were unsuccessful, according to local media. One report said the price cuts exceeded 25% per square meter.
Sentiment online was not supportive of the protesters.
“This is an immoral action,” Weibo user Xiaobai Yeyou Naxieshi wrote in one of the 7 million property-related posts Sina had collected Tuesday on a special topic page. “Buying a house is a form of investment and every investment involves risk. If prices didn’t fall, people who can’t afford to buy an apartment would really have to wait forever.”

“Dear Government, can you please cancel my purchase of Petrochina shares? A refund based on the IPO price would be fine,” joked Linshi Renyuan. Petrochina, which debuted on the Shanghai stock market at 16.7 yuan per share in 2007, was trading at to 9.85 yuan per share at the end of the day Tuesday.

Australians Facing Financial Stress Due to Homeownership

More Australians face housing stress
House prices in Australia have been growing steadily now for the past 15 years, but the income of everyday Australians has not kept up.
So, where exactly does the money come from to drive the price of houses? Look ma, it's not wealth, it's debt!

Figures from RP Data show the average Australian income is now between $55,000 and $60,000, but a typical house is worth around $450,000.

With the cost of living included, this means the median dwelling price is around 6.5 times disposable income for households, more than double what is considered affordable.

"I think the most likely scenario is small house price declines, similar to what we've had in the last 12 months, so where prices are sort of probably down 3 to 5 per cent," [Macquarie Group senior economist Brian Redican] said.
Spoken with authority.

Ordos and Wenzhou Roundup

Key take aways:
Half of Ordos real estate businesses have gone under or are going under.
Only 35% of private lending invested in businesses, most money invested in real estate.
80% of real estate development on Ordos financed by private lending.
One failing hotel can stiff 4000 creditors.
25% of Yangzijiang Shipbuilding's profit came from interest earned in the shadow banking sector
90 percent of all loan-lending enterprises are SOEs (State Owned Enterprises)

The influence of a crash on private lenders will be far reaching and much harder to bail out.

Lending Crisis Stokes Fears of ‘China Economic Model’ Collapse
Many people were engaged in speculative real estate investments a few years ago, according to Ms. Song, an Ordos resident. But recently almost half of Ordos’ real estate businesses have closed or are facing closure, a real estate agent told The Epoch Times.
“Many real estate companies in Ordos have been facing disruption of their capital chain, which will get worst by the end of the year,” financial analyst Li Huizhong, who investigated private capital in Ordos, told China’s National Business Daily.
More than 80 percent of property development in Ordos has been financed by private lending, according to the report [from the Ministry of Housing and Urban-Rural Development].
A lot of money from private lenders has also gone into the real estate market, Zhou Dewen, chairman of Wenzhou's Small and Medium Enterprise Development and Promotion (SMEDP) told Zheshang Magazine. Only 35 percent was invested in businesses, according to a report by the Central Bank’s branch in Wenzhou.

China's borrow-and-die epidemic spreads north

Su Yelu is the latest property developer to be detained by public security officials after allegedly fleeing last month with a large amount of unpaid debts. Two years ago, Su was only a restaurant boss in the downtown area in Ordos. Ambitious to build a hotel, she borrowed money through her workers and their families, who hoped to earn high interest, according to some mainland media.

As the property sector in Ordos tightened when Beijing acted to cool the property market, Su's business failed, her hotel not finished. Her case is said to have involved 4,000 creditors.

Shadow banking casts a cloud in China
The temporary profitability of informal banking seems to have also lured many SOEs to participate in the business, sometimes on-lending funds borrowed from banks to earn high spreads. Even listed companies got into the game, including Singapore-listed Yangzijiang Shipbuilding; it was reported that more than 25 per cent of the company's pre-tax profits in the second quarter came from its loan activities.

Shadow banking risky (from China Daily)
According to Japan-based Nomura Securities, the size of China's shadow financing could amount to 8.5 trillion yuan ($1.33 trillion). Liu Jigang, a researcher from ANZ bank, estimates it could even be as high as 10 trillion yuan. These estimates may not be accurate, but they nonetheless highlight the problem of shadow banking in China.
None-bank loans were only 8.7 percent of the total yuan loans in 2002, but had grown to 79.7 percent in 2010. This growth in finance means the loan size is no longer an index of money supply-demand relations.
The high returns attract more economic participants and even State-owned enterprises (SOEs) have joined the game. According to the Financial Times, several jumbo SOEs have financial platforms, while 90 percent of all loan-lending enterprises are SOEs.
This last one is interesting as it is written by a researcher at the State Information Center. The usual pattern of articles with any dire economic tone is to follow the bad news with a policy section. I always assumed the bad news was a kind of semi-official red flag to warn the reader that the central government is serious about the policy in question. This article contains no policy announcement.

Sunday, October 23, 2011

Call for 20% Drop in Prices 'way out there'

An apparently sober Andrew Harvey wants doomsayers held accountable for their predictions. (Nothing scares a bull betting his future on buyers intoxicated by leverage more than a whiff of a wider perspective circulating in the marketplace.) So, indeed, let's have some accountability. Noting Mr. Harvey's poo-pooing below for later reference.
Keen's house price hit won't happen
And the calls seem to be getting more outlandish, with the latest prediction being for a 20 per cent drop in Australian house prices between now and the end of 2013.
A whole 20%! That would be a 24% fall overall since the peak (approximately). Again for future reference.

It is the long-term trends in underlying demand and supply that drive housing prices.
No, it's access to credit that drives prices up. If tomorrow, everyone were forced to pay with cash only, what would the price of houses be? (Yeah, I know, kinda makes your brain stop imagining that, doesn't it?)

The total debt necessary to drive an increasing volume of house prices upward is truly a thing to behold. I notice Mr. Harvey failed to mention the bond markets that actually feed this debt. Odd he ignored it, especially because these markets have been doing well, seen as a safe haven. HM. Makes me wonder if something isn't going wrong in the bond market for Mr. Harvey fail to trumpet it. . . Although bringing it up at all does remind people that the Australian housing market is a game of selling every more expensive houses to each other using foreigners' money. Nothing about that sounds dodgy at all.

Increases in the ratio prior to 2003 were due in large part to structural changes in the economy which increased the availability of housing credit.
Whoa there, Kemo Sabe. You admit that access to credit drove the bubble before 2003, but somehow, not after that? And that there was no correction for the pre 2003 bubble, either?
More importantly, Australian households remain highly able to service their housing debt, with arrears still at low levels when compared internationally.
Yeah, if you cherry pick the numbers. Sure. I notice you failed to mention that Australian household debt levels are recordbreaking (north of 154% of income, compared to 118% in the late 90s early 2000s), especially compared internationally. You and Canada are really duking it out for worst debt-ridden. Both in excess of the U.S. at our most, um, excessive.

And China’s demand for iron ore has not been on a stable upwards trend but rather it has been growing exponentially. Basically, the amount of iron ore the country sucks in has been doubling every three years. The investment in Australia’s largest resource projects to help meet this and other demand is in the main locked in. In other words, no matter what happens in Europe, we have roughly a two-year period where business investment will contribute strongly to our growth.
Hey, China is going to buy enough over-priced iron ore to bail out the economy. Iron ore, really? Australia loves being an economic colony, apparently. Export raw materials, import finished products. . . And by the way, it's 5.6% of total GDP and less than 1% of your national workforce, mining is. But it is going to help all those masses of Aussies get out from under their recordbreaking debt burden. Yeah, you've definitely proven your point there.

Using fiscal and monetary policy to stimulate the economy when needed is entirely appropriate and the prospect should not be ignored when expressing a future outlook.
Ha. And if all else fails, we'll kick the can down the road. Oh, I'm totally convinced.

Justification as to why the crash didn’t happen has subsequently been far from convincing.
Kinda like this article you just wrote, you mean?

In economic terms the claim can be shot down on both theoretical and empirical grounds, but there is a risk that doing so gives more oxygen to such a claim when instead it should be doused.
You started drinking before you finished writing. And you were doing so well too.

Everybody is entitled to their opinion, but individuals should refrain from frightening people with opinions that by their very nature generate scary headlines, but that fail to transpire.
And cheerleading a bubble so even more young people are sucked into debt slavery isn't irresponsible?

Inherent value would be inherently obvious. However, value judgements made now based solely on large expected future gains are possibly susceptible to negative news. Imagine that after all those arguments about the massive shortages and free money for all forever and all the rusty rocks of iron ore heading north to China to build yet another 5x5 cubicle of office space for every man, woman, and child in the country. After all those iron clad arguments of fact, a little thing like sentiment is such a scary spectre.

Hey, Mr. Harvey. Boo!

Saturday, October 22, 2011

There is no bubble in Vancouver

HST delays hurt housing sector: property experts
"It must be something political or social because it certainly has nothing to do with economics." [Ward McAllister, president of Ledingham McAllister Properties] said.

He forecast low-interest rates for the foreseeable future, which will translate into continuing sales.

"There is no bubble in Vancouver," [Richard Wozny, of Site Economics Ltd.] said.

McAllister had advice for prospective homeowners in their 20s who are questioning whether they should wait for prices to come down: Don't wait, borrow from mom and dad. And he warned against selling, hoping to get back into the market later.

"Affordability is one of the main concerns in this market and I think will continue to be over the rest of my life."

Noted. Also some whining about the chaos in the sales tax. "Any of our product that's $525,000 and over, which is the threshold, is sitting." For the record, 525k/68k is 7.7x median income.

Friday, October 21, 2011

Property Bubble in Australia Is a Myth

So says Andrew Winter, as written by Andrew Winter. (Seriously)

Property bubble a myth, Andrew Winter says
This occurs a few times every decade but it seems to suffering overuse since the global financial crisis in 2008.
Were you sober when you wrote this?

In regards to predictions of 15% off the average Aussie home.
But what is the average Aussie home? Who knows? That is exactly why these wild generic statements are rarely accurate.
Now you are just jerking us around, right? "Wild generic"?

For someone complaining about article writers tossing statistically meaningful terms about in a sloppy manner your language sure is sloppy. But, it's true that an Average Aussie Home is whatever the writer wants it to be, falling somewhere between repurposed chicken coops and private islands with multilevel swimming pools. Australia lacks for a Case Schiller style index, it's true. RPData does try to address this in their Hedonic Index. But you didn't cite anyone, so there is no way to actually determine whether the predictions were deficient on this point.

But are we really about to suffer massive house deflation?
It is very unlikely. And it's unlikely because in many places deflation has already occurred and values have steadied.
This is a bold statement going into the big spring season, my friend. Steady is not actually what you want to see at this time if you are a bubble cheerleader.

Prices have steadied, and dropped in some markets, it is true, but there is always an upside to a decreasing market and that is of course that it is great for buyers.
Actually, as you are going to see, soon enough, it's not great for buyers. It's a trap.

My advice is don't panic. Get to know the market you want to buy in, I mean really get to know it, study sale prices over the last decade, buy in areas where you can secure a good deal and do not over-commit on your mortgage.
The last decade encompasses the credit bubble. That sounds like a horrible idea. And, of course, don't over commit on the mortgage. Warnings like this have a built-in assumption that the bank will happily allow you to do exactly that. I'd call that a red flag.

Well, if your home is listed with a price expectation of 10 per cent more than it is really worth, add a further 5 per cent and yes, you could see yourself "lose'' 15 per cent.
But how much of a true realistic value is that?
What? I've read that three times and I have no idea what it means. Maybe because I haven't drunk as much as you have yet tonight. "Average" and "really worth" are equally meaningless, by the way. Also "true realistic"?

The heavy losses being faced in the UK and US were caused by bad lending practices and housing policies that just don't exist in Australia. They stretched residents in those countries well beyond their means and created a property bubble. But even in these depressed markets, there are signs of recovery.
No, they were caused by a credit bubble, which you definitely have. As well, your residents are deeply stretched, and no there isn't much of a recovery, unless you are cherry picking some "average" of your own in areas where Australians, Canadians and others are buying up property. To return to the long-term average burden for a household, housing in the U.S. needs to fall farther yet.

I don't think you would recognize a deflationary spiral if it stole your car and ran you over with it. Let's see, it includes record consumer debt loads, declining prices for assets, decimated retail sales as households pull back. Sound familiar? As in, like the other headlines in Australia this month.

Newsflash: Buying a home does not set you up for life

In Australia between 2001 and 2009 1/5 of homeowners dropped out and became renters.

Great Australian twist: home buyers drop out
Using data from the Household, Income and Labor Dynamics in Australia survey, Professor Wood tracked the housing histories of thousands of Australians over nine years. During that time 1.65 million ''episodes'' of home ownership were terminated as people moved into rental housing. Among people under 50, the ''survival rate'' in home ownership was 77 per cent.
The former owners who did not return quickly to the property market were more likely to enter public housing or qualify for Commonwealth rent assistance than long-term renters.
In other words, owning a house nearly bankrupted these families.

Also, such tragic terms being utilized in this article to describe the simple act of moving from renting money on an overvalued asset to renting an asset you don't need to worry about the value of. Orwell would be proud, Adele.

Hat tip: CanuckDownUnder commenting at VREAA (Thanks eh. Mate)

Monday, October 17, 2011

Australian Prices to Rise According to BIS Shrapnel

Sydney, Perth house prices to rise by 20 per cent
Economists are predicting a double-edge sword for Sydney's property market, forecasting the median price to boom from $644,000 to $770,000 in the next three years - on the back of the housing crisis.
The report, prepared by BIS Shrapnel, says the underlying strength of the Australian economy, stable interest rates in the short term, high immigration and a dire shortage of houses in Sydney, will be the main drivers of this growth.
It forecasts the Sydney median house will lift by 19 per cent to $770,000 over the three years to June 2014.
This compares with 20 per cent in Perth, 16 per cent in Brisbane, 8 per cent in Canberra and only 6 per cent in Melbourne.

Let's assume this is correct, and look at some related numbers.
Total housing credit issued in Australia through Sept 2011
This is the total housing debt in Australia. You can see what a trajectory it's been on since financial industry deregulation really got going (specifically in securitization). That bend upward circa 1999 occurs on most westernized countries' graphs. It's really quite remarkable. Occupy Wall Street notwithstanding, the structural reasons behind the growth in the supply side of credit is not the issue of this post.

The issue is should BIS Shrapnel's prediction come true, the total housing credit in Australia must accelerate upward to account for the ballooning in total housing "value". Housing valuations are debt on the other side of the equation. Without increased access to credit the next round of buyers cannot outbid to win their properties at rates in excess of inflation, so that additional money has to come from somewhere. The next graph shows the problem.

Credit issued in Australia through Sept 2011 for business and real estate

That excess credit that got poured into ever larger habitations of wood, plaster, tile, and marble came out of the pockets of business people looking to expand. Note the whack and subsequent decline in credit being issued to business while housing credit soured onward and upward, unabated. Where are the increasing economic gains and therefore increasing employment and wages going to come from if housing is expected (hoped for even!) to choke off credit for business even more over the next three years?

I'll leave you with a little snapshot record of BIS Shrapnel's house price and growth predictions for 2010 from the Oct 2009 report (line 1) and their actual numbers from the Oct 2010 report (line 2). They were wildly wrong (low, but wrong).

BIS Shrapnel predictions, tan line Oct 2009, blue line Oct 2010

Thursday, October 13, 2011

China's Underground Lending $630 Billion a Year

In Cooling China, Loan Sharks Come Knocking
Such illegal lending amounts to about $630 billion a year, or the equivalent of about 10 percent of China’s gross domestic product, according to estimates by the investment bank UBS.
Already, according to a recent survey by the city’s small-business council, one in five of Wenzhou’s 360,000 small and medium-size businesses have recently stopped operating because of cash shortages.

Wednesday, October 12, 2011

Shanghai Golden Week Primary Real Estate Sales Down 80% Year on Year

China realty goes BOGOF
Shanghai, for instance, experienced the worst Gold Week holiday in 6 years. Only 398 units were sold in the primary market for the entire the 7-day long holiday, which is only 20% of the same period of last year (in other words, sales dropped 80% year-on-year) according to According to Xinhua, one developer in Jinan tried to sell their flats by offering gifts like iPads and other electronic products, but without much success. Beijing has been doing somewhat better according, as 866 units were sold in the first 6 days of Golden Week, only 10% fewer than last year, but 62% lower compared to the first week of September. In Nanjing, one developer even offered a buy one (house) get one (flat) free (BOGOF) according to Xinhua, as that developer has failed to sell those houses since December of last year.

The Complicated Lives of Copper and Chinese Real Estate

Obviously there is a link between copper and construction, but in China there is another shadier relationship. Copper is being used as an intermediary device in a kind of single-currency carry trade. A loan at low rates is obtained to buy copper. The copper is warehoused and a letter of credit is issued confirming the copper's existence. That letter is taken back to the bank and borrowed against at 80-85% of value. The money is then used for projects that have had their financing banned, such as real estate. Or the money might be used in the underground banking system to net returns of 10% per month in interest.

If Ken Lay were still alive he'd have died of jealousy just reading that.

Why would anyone go to all this trouble? Well, banks won't loan you money for anything other than buying copper, of course. Now you have money that you can use unrestricted.

No one knows how big this copper loan slight of hand is, but between 2005 and 2009 copper imports grew 100% while GDP grew 30%, implying that much of the difference was warehoused.

Why does it matter? Well, as the price of copper falls (in a reverse Crash JP Morgan sort of way) the collateral backing these loans will no longer cover the loans, leaving the copper carry-trade borrowers insolvent and the banks that issued the debts insolvent as well. Presumably a tipping point will be reached where the banks start liquidating these collateral copper holdings before the price falls any farther.

China's red metal alert
Any move by Beijing to institute new regulations to limit this activity may prove to arrive too late. Speculative tools like copper and real estate have been used in informal and formal lending, making them harder to regulate, thus increasing China’s vulnerability to price declines and financial risk. Beijing understands it needs to clamp down on copper speculation, but it is wary as this may lead to a big rise in non-performing loans at banks.

This article stands in stark contrast to this Reuters one which mentions that copper imports have exceeded GDP (by 10% per year), but fails to mention why, or even theorize where that copper may be going, and it opens with statements from an exceedingly biased gentleman (Fan Shunke, the president of China Non-ferrous Techno-Economic Research Institute) who was trying to sooth the concerns of Swedish miners.

If they can talk the metal up, they can stave off the sour loans, true enough.

Monday, October 10, 2011

Loan Shark Troubles Spread to Wenzhou Neighbor Fujian Province

Xiamen sees sharp increase in private loan disputes
[I]t was reported that several business executives in Xiamen in neighboring Fujian province have also gone on the run because they could not pay back money borrowed from loan sharks.

Local police reported that about 12 billion yuan (US$1.88 billion) is involved in cases of fugitive bosses, according to Strait Herald in Xiamen.
According to an insider of the private lending market in Xiamen, although government authorities have not published information, reliable resources say local police have received reports of loan shark cases involving amounts of up to 12 billion yuan (US$1.88 billion).

The report indicated that 60-70 creditors were directly involved in these cases and represented about 600-700 smaller creditors in turn.

The real risk here, even beyond the closing shops and economic chaos, is the involvement of average households. Americans, with our depression created FDIC, must cast our collective experience back to 1929 and the un-guaranteed bank runs, to get some sense of the devastation that will be wrought when the house of cards comes down. While they might be able to bail out a handful of banks, yet again, the Chinese government cannot bail out 50-70% of all households.
Private Lending Frenzy Triggers Financial Crisis in China's Entrepreneurial Hub
Total deposit outflow from regular banks to the private lending market has been around 3 trillion yuan (US$470.37 billion) during the first three quarters of this year, according to Liu Mingkang from China’s Banking Regulatory Commission.

Sixty-four listed, non-financial companies, 90 percent of which are state-owned enterprises, have invested 16.9 billion yuan (US$2.65 billion) in private loan lending.

In Ordos, Inner Mongolia, 50 percent of residents are involved in underground lending, whereas in Wenzhou, 89 percent of families and 60 percent of businesses are engaged in similar activities.
Ms. Li, who works for a foreign company in Shanghai, told The Epoch Times that her parents have deposited about one million yuan (US$156,800)--their entire life savings and money they made from selling a house--into a small private lending company in Wenzhou, at a 2 percent monthly interest rate. This investment brings them an additional monthly income of 20,000 yuan (US$3,000).

The deal was so sweet that her parents then applied for a secured loan of 800,000 yuan (US$125,000) from a regular bank on another house they owned, and invested the money with the same private lender to earn extra cash, Li said.

Like Li's parents, many ordinary Chinese have been pouring money, including their life savings, into the underground lending market.

Vancouver Prices Still Ebullient in September

Charts charts charts
All data is from REBGV.

Sales are down from 2007 and down significantly from the wild year of 2009, but they are right on the five year average for September, partly because that includes the very depressed year of 2008. Inventories are high and building. MLS will most likely reach 17k again this week for the Greater Vancouver area and make a stab at 18k before the expirations hit at the end of the month.

Chart of monthly sales of single family homes SFH in Vancouver over five years

June continues to be the peak month for home prices.
Chart of Prices of Detached and All Sales in Vancouver 2010 2011
September sales were buoyant, despite worldwide financial turmoil. Theories about real estate being perceived as a safe haven despite recent experiences in the U.S. Ireland and Spain can take some support from this.
Year on Year change in house prices Vancouver
In a per area chart, smoothed quite brutally over 4 months, the main outliers are West Van with its skyrocketing prices and small areas like Port Moody, Maple Ridge and Sunshine for struggling.
Year on Year change in house prices by Vancouver region, smoothed over 4 months.

Wednesday, October 5, 2011

Defaults in Underground Lending Are Magnified

Suicides in Wenzhou link to Chinese defaults
The private-loans market in Wenzhou has created a network of underground financing that is thought to have drawn in nearly 90 per cent of households and 60 per cent of local companies.
Talk about far reaching impact on the citizenry of China. Imagine if Bernie Madoff had sucked in the savings of 90% of New Yorkers.

The chief concern, one that evidently has begun to trouble Beijing, is that the underground lending networks are so pervasive that each default is wildly magnified. A collapse in the loan triangles between companies, shadow banks and private investors seems inevitable.

Monday, October 3, 2011

Negative Gearing Writ Large

Housing group wants tax breaks addressed
Australian Tax Office statistics from 2008-09, analysed by AAH, showed that after landlords took in $24 billion in rental income, they claimed $30 billion in losses, allowing them to write off about $6.5 billion in taxes.

Sunday, October 2, 2011

China Tries to Inflict Pain in Push for Subsidized Housing

In an effort to move forward low-income housing projects, which must be paid for by local governments (local governments which, for the most part, have no income streams aside from selling land to developers for high-profile projects), the central government is trying to hit them where it hurts, their thirst for ostentatious official offices.

Govt steps up push for subsidized residences
China's State Council announced this weekend that local governments that have failed to complete the construction of planned subsidized housing projects will not be allowed to construct or buy new official buildings.
Of the subsidized-housing projects that the government plans to have built in 2011, 86 percent were under construction within the first eight months of the year, according to statistics from the Ministry of Housing and Urban-Rural Development.
One does wonder what constitutes "under construction". Girders being ordered? A single shovel in the ground?

The central government wishes to "offer hope", as the article phrases it, to the disenfranchised masses. But the numbers don't work, and won't until there is real revenue streams for the local government to draw upon. Oh and the rife corruption in development would have to be dealt with too.