Posted on 12/06/2011 4:29:30 AM PST by TigerLikesRooster
December 5, 2011, 9:58 PM HKT
Ominous Ordos: Dispatch from a Chinese Ghost Town
Ordos – a town in the desert of Inner Mongolia – has become a symbol of the excesses of China’s real estate boom.
Reports in the local press that property prices in the eeriest of China’s ghost towns had fallen 70% had China Real Time Report on the next plane out there. We found little evidence of a collapse in prices yet. But with sales volume sharply down that could be just around the corner.
“You want to know why they were building all those houses in the desert?” asked a Louis Vuitton-clad investor on the plane to Ordos from Beijing. “It was always about the speculation.”
Speculation pushed developers to build an entire new town: rows of empty apartment blocks, luxury villas, a town square that rivals Beijing’s Tiananmen in size. Most of the apartments were unoccupied, but as long as investors continued to buy and prices to rise, that was a secondary concern.
Now two years of government controls on the sector have chased the speculators out and sales have dried up. Zhao Yanan, a sales rep for Heng Sen Property company sums up the malaise: “I hear some sales offices in new town have closed completely because there are no buyers”.
Developments were funded with profits from local industry – Ordos sits on top of one of China’s largest coal deposits. Coal barons started their own real estate firms, and other wealthy locals piled in, lending funds to developers at interest rates the banks could only dream of.
(Excerpt) Read more at blogs.wsj.com ...
P!
Great. First my Enron stock and now my Chinese real estate portfolio. Good thing I’ve still got all those European bank bonds.
The Chinese are inscrutable.
They have no scrutes.
I’ve been burned once too often. This time I’m in a sure thing, Paraquayan bonds.
Did any body tell you that the Euro banks are large holders of Chinese real estate securities that are bundles of mortgages?
AAAARRRGGGGGGHHHHHHHHH!!!!!!!!
I wonder how much MF Global was invested in China’s real estate.
They have really big Beanie Babies in China.
That’s what I hate about buy a Chinese house, a hour after you buy it you are homeless again.
It’s worse than that: China to Cancel College Majors That Don’t Pay
http://blogs.wsj.com/chinarealtime/2011/11/23/china-to-cancel-college-majors-that-dont-pay/
Central planning at its best.
I was going to put my kids through college with Beanie Babies and “Gone With the Wind” decorative plates.
Didn’t work out.
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