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Ghost Cities Reveal China’s Real Estate Glut

Posted by Staff Reporter on Apr 08, 2016 09:15 AM EDT
'Ghost City' City In Chongqing more big
A view of a god's statue built on a hill is seen in the 'Ghost City' at Mingshan Scenic Area August 3, 2006 in Fengdu County, Chongqing Municipality, China. The 'Ghost City', an ancient town where legendarily hell lies, has attracted tourists by its ghost culture and entertainments. August 8 this year marks the Zhongyuan Festival, also known as the Ghost Festival, which is the Chinese equivalent to the Western Halloween. (Photo : Getty Images/China Photos/)

The real estate glut in China can be seen through its new ghost cities: Dongling, Nanguan, Kerqin, Saihan, Yijinhuoluoqi, Yuhong. They were discovered by a Peking University study which utilized Baidu data to discover cities with major housing developments that search engine's users were not visiting very often. The rationale was that if no one went to these places, then there was a possibility that they were vacant. These ghost towns were systematically built at the peak of China's urbanization boom.

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The list of places were under-populated new areas that had something in common: nobody had ever heard of them before. Many were relatively small, unimportant cities floating beyond the outskirts of China's major economic powerhouses, according to a feature from The Daily Bell.

The real estate glut was no longer represented by places like Shanghai's Lujiazui and Guangzhou's Zhujiang which were once the center of international criticism for being under-populated. These places had filled up and had become economically vital engines. Even Ordos Kangbashi now had 100,000 people. The places with gluts of unsold homes were mostly diminutive developments that were constructed by relatively minor metro areas. Oftentimes, these places were dusty, obsolete towns in the north of the nation that were trying to generate new industries to improve their livelihood.

There was a key difference between empty apartments that had been sold and unsold inventory. Purchased residences that were empty for the short term was common in China.  These were not signs of any kind of economic issues. The developers got their pay and the local government got their land sale and tax revenue. Investors were often allowed to resell the properties for higher prices than they paid. Beijing was technically 20 percent empty.

The real estate glut in China, however, meant that vacant property in the country took on multiple functions such as being a future home for married children to move into, according to a feature from China Daily USA.

 

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