Empty Cities: China's phony construction boom

http://www.youtube.com/watch?v=GpnoPhY1f70



http://investideas.net/forum/viewtopic.p...9&start=80

In China There's Not One City Without Terrifying Stretches Of Empty Houses
http://www.forbes.com/sites/realspin/201...ba-1820733

I think there is a big difference between "sold" and "unsold" empty houses, and domestic demand vs foreign demand

In the article, I find this statement interesting:

~What this means is not that that housing in China has become a new type of tradable and fungible commodity something like wristwatches or jewelry or indeed piles of copper or gold. The purchased units are left empty, because renting them would depreciate the value of the real estate; living in the housing is actually an impediment to realizing its value. ~

Will this become a norm in other countries with vast pieces of land to spare? Esp. in countries where there is wide gap between the rich and poor.

I thought houses left vacant for a long period of time will deteriorate faster, due to no movement of yin and yang. It’s a wasted resource actually.

(29-10-2013, 12:47 PM)Behappyalways Wrote: In China There's Not One City Without Terrifying Stretches Of Empty Houses
http://www.forbes.com/sites/realspin/201...ba-1820733

Residential property is an expense because it doesn't produce cashflow generally, unless you have an investment property. That's why a bubble (vs gradual inflation beating appreciation) in residential is almost always bad because it is just funny money capital gains, feel good wealth effect with no cashflows nor value added productions (except of course commissions and constructions).

Nonetheless my point is that though it is a problem in China, it is not as dramatic as the west painted it to be. They don't understand Chinese obsession with real estates, as they understand correctly that it is an expense to be managed.

(29-10-2013, 02:40 PM)specuvestor Wrote: Residential property is an expense because it doesn't produce cashflow generally, unless you have an investment property. That's why a bubble (vs gradual inflation beating appreciation) in residential is almost always bad because it is just funny money capital gains, feel good wealth effect with no cashflows nor value added productions (except of course commissions and constructions).

Nonetheless my point is that though it is a problem in China, it is not as dramatic as the west painted it to be. They don't understand Chinese obsession with real estates, as they understand correctly that it is an expense to be managed.

I always read western article on property bubble in China, with a pinch of salt. The value of "Home" is quite different between Westerner and Chinese.

Bubble is there, but not as bad as painted, especially so in tier-1 cities, IMO.

Let's play with numbers......

RMB30,900psm = S$6286.35psm = S$582psf when converted to Sing Dollar



北京10月二手房均价突破三万
http://finance.sina.com.cn/china/dfjj/20...e-24564481

(29-10-2013, 02:52 PM)CityFarmer Wrote:

(29-10-2013, 02:40 PM)specuvestor Wrote: Residential property is an expense because it doesn't produce cashflow generally, unless you have an investment property. That's why a bubble (vs gradual inflation beating appreciation) in residential is almost always bad because it is just funny money capital gains, feel good wealth effect with no cashflows nor value added productions (except of course commissions and constructions).

Nonetheless my point is that though it is a problem in China, it is not as dramatic as the west painted it to be. They don't understand Chinese obsession with real estates, as they understand correctly that it is an expense to be managed.

I always read western article on property bubble in China, with a pinch of salt. The value of "Home" is quite different between Westerner and Chinese.

Bubble is there, but not as bad as painted, especially so in tier-1 cities, IMO.

But could all these evidences be untrue ?

http://www.youtube.com/watch?v=pbDeS_mXMnM

http://im.ft-static.com/content/images/e...ebc863.img

This chart from the Financial Times roughly explains what is going on and the risks involved.

(29-10-2013, 04:58 PM)cfa Wrote:

(29-10-2013, 02:52 PM)CityFarmer Wrote:

(29-10-2013, 02:40 PM)specuvestor Wrote: Residential property is an expense because it doesn't produce cashflow generally, unless you have an investment property. That's why a bubble (vs gradual inflation beating appreciation) in residential is almost always bad because it is just funny money capital gains, feel good wealth effect with no cashflows nor value added productions (except of course commissions and constructions).

Nonetheless my point is that though it is a problem in China, it is not as dramatic as the west painted it to be. They don't understand Chinese obsession with real estates, as they understand correctly that it is an expense to be managed.

I always read western article on property bubble in China, with a pinch of salt. The value of "Home" is quite different between Westerner and Chinese.

Bubble is there, but not as bad as painted, especially so in tier-1 cities, IMO.

But could all these evidences be untrue ?

http://www.youtube.com/watch?v=pbDeS_mXMnM

It seems a response is eagerly waited.

As a normal guideline, one-side stories should always be taken with a pinch of salt. It is true, but might not be the full picture.

In the same vein, the Kovan murder was brutal and a true story, but it shouldn't be taken as a norm in Singapore.