4 ms·

Aren't there a lot of people living in really bad conditions in China? Why does the Chinese government not allow these people to move into these empty building

by dm2 12y ago

Aren't there a lot of people living in really bad conditions in China? Why does the Chinese government not allow these people to move into these empty buildings? Wouldn't any rent being paid be better than the buildings sitting there earning nothing? It could be done with a lottery or with very clever analysis of who would be best suited for these buildings. (need teachers, butchers, shop keepers/merchants, police, fire-fighters, etc., in the appropriate amounts) The buildings just sitting there seems like the worst option, doesn't it? I'm probably very ignorant on the economics of this type of thing but I would be very interested in learning. Does anyone know of a detailed explanation of why these buildings aren't being populated? There are several Eiffel Tower replicas all over the world, 3 in China, 1 of them is full-scale: http://en.wikipedia.org/wiki/List_of_Eiffel_Tower_replicas http://en.wikipedia.org/wiki/List_of_Eiffel_Tower_replicas

akanet 12y ago
A low rental price on a high-end condo would immediately devalue the condo and any surrounding units - which is worse to the property development people than no rental income at all. They live by essentially propagating high prices for development.
- dm2 12y ago
  By "property development people" do you mean the hired construction companies or the Chinese government? Doesn't the Chinese government own these cities and buildings?
  - hangonhn 12y ago
    "Doesn't the Chinese government own these cities and buildings?" No. There is private property in China, even if the laws for it isn't as strongly protected as in other countries.
    - dm2 12y ago
      So when do the investors of these properties expect these buildings to start generating income? Who are these wealthy investors? Couldn't the money be better invested in thousands of ways? Sorry if these questions are dumb, I'm just really interested in this and can't wrap my head around it.
      - anatari 12y ago
        1. When they decide to sell the property 2. Just like in the U.S., mostly normal "middle class" people with the help of banks 3. In the past decade, not really, real estate has been less volatile and outperformed the Shanghai stock market as an example.
        seanmcdirmid 12y ago
        Only because the shanghai stock exchange is mostly insider trading and at least in the property market, you might win without that much guanxi.
      - deleted 12y ago
        [deleted]
      - hangonhn 12y ago
        These questions aren't dumb. In fact, they stem from a sense of how things should work and asking them lead to exploration to why things aren't as we expected. That's how interesting and awesome things are discovered. I don't have all the answers as this issue is very complex. I try to answer parts of it based on what I know (from travels in China and reading articles about China). First, there really aren't that many ways to invest your money in China. The equity market there is quite nascent and rocky. Fraud happens quite a bit more than the US and there simply aren't that many choices. The finance industry in China is underdeveloped and heavily regulated. The other issue is that a lot of the money was borrowed from state owned banks when lending was cheap and there was a lot less accountability. Lastly, China runs a pretty big trade surplus. So basically the conditions lead to a situation where China was or still is awash in capital and very few places to invest. Real estate really isn't that bad of a choice. China moved 500 million people out of poverty and into the middle class in the last couple of decades. Those people will want places to live. In the long term, real estate in China isn't a bad bet but all that wealth China created need to trickle down to people and get spread among the larger population so they can afford to live in these new places. Just as a general observation, China's development is very uneven. They are good at what they've focused on but lacking systematically (for example, great highways and roads but no one really enforcing traffic laws so people drive the wrong way all the time). They lack larger systems that make everything work together. Those things can't just happen overnight like China's manufacturing industry did. It will take time for them to realize the problems and find solutions to them.
    - lnanek2 12y ago
      That's not true, you buy and sell limited time span land use grants: http://en.wikipedia.org/wiki/Chinese_property_law http://en.wikipedia.org/wiki/Chinese_property_law E.g. the government gets it back after some period like 70-90 years. You don't own the land you just buy and sell use of it for time periods.
      - seanmcdirmid 12y ago
        Nobody is banking on that being true later either, though it is the law of the land now. What is the gov going to do at the 90 year mark, confiscate everyone's home whose ancestors bought 90 years ago? Tricky....
ajmurmann 12y ago
I also never understand why it's seen as so important that real estate prices go up. Statements like "Chinese-based parents who are funding their children's purchases are helping the Irish property recovery." from the article always baffle me. Isn't it great if real estate is cheap? It means people can afford to live there and spend there money on other things and keep the economy going that way. I certainly prefer that over what's going on in SF. I understand that often times people will take out mortgages against there houses if the price goes up and that way money goes back into the economy. But in my opinion that's not real money and will only lead to another 2008.
- dm2 12y ago
  That's what I'm thinking, even if the property and surrounding properties are devalued now at least they would be creating an economy in the city. They could always raise the prices later. I just don't understand how empty could ever be better unless the cost of maintaining a lived in building was higher than a non-lived in building.. Then again, I see the same thing here in the US. Companies like Cisco buy huge office buildings and leave them empty for years. I suppose it's because building prices are cheap now. I always thought it was because there was a movement for workers to work from home more.
- marincounty 12y ago
  The rent in San Francisco and Marin County is going up too fast. I hate to say this on this board, but I'll be glad when the tech bubble bursts. I have some friends in San Francisco and I'm so glad they are protected by rent control. Marin County only has rent control in San Anselmo. If you live in San Anselmo and you live in a detached "Mother in-law" unit you have rent control. As to Landlords, who consistently raise rents to whatever the market bares--don't complain when your Tenants really don't give a dam about your property, or you? Your tenants know the difference between gouging, and reasonable rent increases. Being a Landlord is a little different than making money in the stock market. That person who has carved out a litte life in your community, and home--sometimes as to pass you in the Hallway in order to get to the bathroom? "But, I'm just doing what Everyone else is doing?" Sometimes--relationships are more important than maximizing capital, maybe that's how the term mother in-law unit came to fruition? "Hell, throw her out--I hear it's cheap to live in Chicago? By Mom!" I just don't get it I guess?
deleted 12y ago
[deleted]
SoftwareMaven 12y ago
I have a feeling the problem is jobs. What are the industrial jobs that will form the community's foundation? No jobs means nobody wants to move there.
- politician 12y ago
  Perhaps, but I think the problem actually might be "new wealth doesn't know how to invest". In other words, people who've come into the cities, earned some money, and now are wondering what to do with it.
mimighost 12y ago
Those buildings are not populated for several reasons: 1.Sits in the suburb area where the public transit is very poor. 2.Lacks basic public facilities like schools and hospitals. Basically, those ghost cities are the outcomes driven by the local government's insatiate desires to sell more lands to real estate developers, the revenue from which has become a critical part of its total income.
starky 12y ago
Not really a detailed explanation but when I was there a few months ago the guy I was with said that a lot of them were sitting around unfinished because they didn't have any buyers. A lot of them are so called luxury buildings where I'm sure the developers don't want people who can't afford that type of life living, they were pointing out buildings where apartments were 1.5M RMB ($250k) which given the wages in China is just a bit ridiculous. The factory I was visiting was constantly complaining about how nobody wanted to work in the south of China anymore and that all the workers had moved up to Shanghai, yet there was all this construction and plans for huge growth in the area. I just couldn't figure out how they were justifying these plans.
crdoconnor 12y ago
>Why does the Chinese government not allow these people to move into these empty buildings? For the same reason why the American government doesn't let people move into the large number of empty high end luxury apartments in downtown Manhattan. They all belong to somebody.

by dm2 12y ago

akanet 12y ago

A low rental price on a high-end condo would immediately devalue the condo and any surrounding units - which is worse to the property development people than no rental income at all. They live by essentially propagating high prices for development.

dm2 12y ago
By "property development people" do you mean the hired construction companies or the Chinese government? Doesn't the Chinese government own these cities and buildings?
- hangonhn 12y ago
  "Doesn't the Chinese government own these cities and buildings?" No. There is private property in China, even if the laws for it isn't as strongly protected as in other countries.
  - dm2 12y ago
    So when do the investors of these properties expect these buildings to start generating income? Who are these wealthy investors? Couldn't the money be better invested in thousands of ways? Sorry if these questions are dumb, I'm just really interested in this and can't wrap my head around it.
    - anatari 12y ago
      1. When they decide to sell the property 2. Just like in the U.S., mostly normal "middle class" people with the help of banks 3. In the past decade, not really, real estate has been less volatile and outperformed the Shanghai stock market as an example.
      - seanmcdirmid 12y ago
        Only because the shanghai stock exchange is mostly insider trading and at least in the property market, you might win without that much guanxi.
    - deleted 12y ago
      [deleted]
    - hangonhn 12y ago
      These questions aren't dumb. In fact, they stem from a sense of how things should work and asking them lead to exploration to why things aren't as we expected. That's how interesting and awesome things are discovered. I don't have all the answers as this issue is very complex. I try to answer parts of it based on what I know (from travels in China and reading articles about China). First, there really aren't that many ways to invest your money in China. The equity market there is quite nascent and rocky. Fraud happens quite a bit more than the US and there simply aren't that many choices. The finance industry in China is underdeveloped and heavily regulated. The other issue is that a lot of the money was borrowed from state owned banks when lending was cheap and there was a lot less accountability. Lastly, China runs a pretty big trade surplus. So basically the conditions lead to a situation where China was or still is awash in capital and very few places to invest. Real estate really isn't that bad of a choice. China moved 500 million people out of poverty and into the middle class in the last couple of decades. Those people will want places to live. In the long term, real estate in China isn't a bad bet but all that wealth China created need to trickle down to people and get spread among the larger population so they can afford to live in these new places. Just as a general observation, China's development is very uneven. They are good at what they've focused on but lacking systematically (for example, great highways and roads but no one really enforcing traffic laws so people drive the wrong way all the time). They lack larger systems that make everything work together. Those things can't just happen overnight like China's manufacturing industry did. It will take time for them to realize the problems and find solutions to them.
  - lnanek2 12y ago
    That's not true, you buy and sell limited time span land use grants: http://en.wikipedia.org/wiki/Chinese_property_law http://en.wikipedia.org/wiki/Chinese_property_law E.g. the government gets it back after some period like 70-90 years. You don't own the land you just buy and sell use of it for time periods.
    - seanmcdirmid 12y ago
      Nobody is banking on that being true later either, though it is the law of the land now. What is the gov going to do at the 90 year mark, confiscate everyone's home whose ancestors bought 90 years ago? Tricky....

ajmurmann 12y ago

I also never understand why it's seen as so important that real estate prices go up. Statements like "Chinese-based parents who are funding their children's purchases are helping the Irish property recovery." from the article always baffle me. Isn't it great if real estate is cheap? It means people can afford to live there and spend there money on other things and keep the economy going that way. I certainly prefer that over what's going on in SF. I understand that often times people will take out mortgages against there houses if the price goes up and that way money goes back into the economy. But in my opinion that's not real money and will only lead to another 2008.

dm2 12y ago
That's what I'm thinking, even if the property and surrounding properties are devalued now at least they would be creating an economy in the city. They could always raise the prices later. I just don't understand how empty could ever be better unless the cost of maintaining a lived in building was higher than a non-lived in building.. Then again, I see the same thing here in the US. Companies like Cisco buy huge office buildings and leave them empty for years. I suppose it's because building prices are cheap now. I always thought it was because there was a movement for workers to work from home more.
marincounty 12y ago
The rent in San Francisco and Marin County is going up too fast. I hate to say this on this board, but I'll be glad when the tech bubble bursts. I have some friends in San Francisco and I'm so glad they are protected by rent control. Marin County only has rent control in San Anselmo. If you live in San Anselmo and you live in a detached "Mother in-law" unit you have rent control. As to Landlords, who consistently raise rents to whatever the market bares--don't complain when your Tenants really don't give a dam about your property, or you? Your tenants know the difference between gouging, and reasonable rent increases. Being a Landlord is a little different than making money in the stock market. That person who has carved out a litte life in your community, and home--sometimes as to pass you in the Hallway in order to get to the bathroom? "But, I'm just doing what Everyone else is doing?" Sometimes--relationships are more important than maximizing capital, maybe that's how the term mother in-law unit came to fruition? "Hell, throw her out--I hear it's cheap to live in Chicago? By Mom!" I just don't get it I guess?

deleted 12y ago

[deleted]

SoftwareMaven 12y ago

I have a feeling the problem is jobs. What are the industrial jobs that will form the community's foundation? No jobs means nobody wants to move there.

politician 12y ago
Perhaps, but I think the problem actually might be "new wealth doesn't know how to invest". In other words, people who've come into the cities, earned some money, and now are wondering what to do with it.

mimighost 12y ago

Those buildings are not populated for several reasons: 1.Sits in the suburb area where the public transit is very poor. 2.Lacks basic public facilities like schools and hospitals. Basically, those ghost cities are the outcomes driven by the local government's insatiate desires to sell more lands to real estate developers, the revenue from which has become a critical part of its total income.

starky 12y ago

Not really a detailed explanation but when I was there a few months ago the guy I was with said that a lot of them were sitting around unfinished because they didn't have any buyers. A lot of them are so called luxury buildings where I'm sure the developers don't want people who can't afford that type of life living, they were pointing out buildings where apartments were 1.5M RMB ($250k) which given the wages in China is just a bit ridiculous. The factory I was visiting was constantly complaining about how nobody wanted to work in the south of China anymore and that all the workers had moved up to Shanghai, yet there was all this construction and plans for huge growth in the area. I just couldn't figure out how they were justifying these plans.

crdoconnor 12y ago

>Why does the Chinese government not allow these people to move into these empty buildings? For the same reason why the American government doesn't let people move into the large number of empty high end luxury apartments in downtown Manhattan. They all belong to somebody.