The UK Telegraph’s Ambrose Evans-Pritchard has written an interesting article citing research by Nomura on the building glut of unsold Chinese homes, whereby eight large “ghost cities” have apparently been constructed:
Nomura said the number of ghost towns has spread beyond the well-known disaster stories of Ordos and Wenzhou to at least eight other sites. Three developers have abandoned half-built projects in the 2.5m-strong city of Yingkou, on the Liaodong peninsular. They have fled the area, a pattern replicated in Jizhou and Tongchuan.
Yu Xuejun, the Jiangsu banking regulator, said developers are running out of cash. This risks undermining land sales needed to fund local government entities. “Credit defaults will definitely happen. It’s just a matter of timing, scale and how big the impact is,” he said…
Nomura said residential construction has jumped fivefold from 497m square metres in new floor space to 2.596bn last year. Floor space per capita has reached 30 square metres, surpassing the level in Japan in 1988 just before the Tokyo market collapsed.
Meanwhile, the rapid construction of homes in China looks set to continue for a while longer, with the Chinese Government announcing that it will spend more than $US162 billion this year redeveloping shantytowns as the government seeks to boost its urban population to support growth. From Bloomberg:
More than 4.75 million households will be involved, state broadcaster China Central Television reported yesterday, citing the housing ministry…
Premier Li Keqiang said March 13 that tens of millions of people still live in shantytowns, which Xinhua says are areas of dilapidated housing where poor factory workers often live.
