China’s “ghost towns” and the biggest housing crisis of all time

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Domino situations in the already existing and burning issue of the housing crisis that has plagued China for almost a decade, is provoked by its revelation a few weeks ago case of the Chinese real estate management company, Evergrande.

And investors around the world may be waiting to see what happens to its huge debt, but there is an even deeper problem here: China’s real estate market is collapsing, dragging other industries along its line, with experts and analysts to talk about “the biggest housing crisis in the world”.

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Right now, there are about all over China 65 million (the most pessimistic are talking about 80 million) empty apartments, a number that is capable of hosting its entirety population of France (or Germany, according to the pessimists).

As characteristically states Extensive Business Insider reporting, who made a huge trek to the vast country, “if you drive one or two hours out of Shanghai or Beijing, you will find something strange: cities with tall and massive buildings which in contrast to large Chinese metropolises are relatively empty.”

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These uninhabited buildings, according to the publication, are an important part of the huge China’s real estate market, which is twice the size of the US housing market, reaching $ 52 trillion in value in 2019.

The most famous ghost town is “Ordos New Town” or Kangbashi, which is located near the border with Mongolia. At the beginning of 2000, its population exceeded one million. From 2016 onwards, however, the desertification began, with the population no longer exceeding 100,000.

And Kangbashi is just the top of the problem pyramid. Because, unlike the housing crisis that erupted in 2008-09 in the US, where homes were completely abandoned by their owners, in China things are different as these areas have not been abandoned they just never lived!

The houses were built and they were left unoccupied and rented, “orphaned” by an owner.

The problem naturally starts, as expected, with the Chinese government itself Beijing, in a multi-year effort to develop urbanization, builds 15 million new homes annually, a number five times higher than in the US and Europe.

And the World Bank figures show that 61% of the country’s population lived in cities last year compared to 35.8% in 2000, but the numbers are staggering: out of 65-80 unsold and unsold homes, another 100 millions of properties have been sold uninhabited, although they can house almost 260 million people.

Great supply and minimal demand

Somehow, the China has turned into a vast expanse full “Ghost towns”. A country full of modern cities, with modern buildings and facilities and infrastructure, but where no one wants (or can not afford) to live there, with the problem, according to analysts, lies in the negative balance between supply and demand: Many apartments for the few interested.

“The problem is that China has a long way to go overestimate the prospect of urbanization of the population. “How many more want to move from a rural area to an urban area?” Lee Gan, professor at the University of Texas.

As noted in the article, dozens of supercontractors, from 2005 until today, have built a series of buildings and apartment buildings with the logic that one day they would sell them in Beijing for a hefty financial return. Cities were built but people never went to stay there simply because the Chinese government gave them absolutely no incentive to relocate. And as the Chinese Ministry of Interior said last year, across the country, About 220 million apartments have been built, from the Autonomous Inner Mongolia to Henan and Yunnan provinces, cities such as Kunming in Yunnan and Yuxiapu in Tianxin.

The “ghost towns” may not have been used in a purely residential way, but at least they were used in an aesthetic and photographic level. THE photographer Kai Kemer in 2015 traveled to China to explore and photograph these deserted cities. And the His series of photographs entitled “Unborn Cities”, is an indisputable witness of a housing “accident” made in China with hitherto unknown consequences.

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