Showing posts with label Real estate Bubble. Show all posts
Showing posts with label Real estate Bubble. Show all posts

Monday, November 23, 2015

How Many Ghost Cities Are There in China?

Map from a Baidu study on 20 cities with a large vacant housing area
China has experienced fast development during the past decades. In 1990, 26% of the Chinese population lived in cities. Today the urban population makes up about 54% of the total population. According to current estimates, 15 years from now China’s cities will contain 70% of the national population, amounting to about 1 billion people. From 1984 to 2010, the urban built up area has increased from 8,842 to 41,768 square kilometers. The urbanization speed is unprecedented in human history with so many buildings constructed in such a short time. The amount of concrete used in China in only three years (2011‐2013) is more than that used in U.S. in the 20th century. The fast urbanization of China has contributed to the high housing vacancy rate in some cities. Many new housing districts are built, but they far exceed the actual demand.
Tianducheng - Paris of the East (HERE)
In these cities, the population density is very low, and the residential districts are dark with few lights at night. Therefore, they are called “ghost cities". The “Ghost city” phenomenon has attracted much attention in recent years. China is the world's most populated country without a doubt has the world's largest number of empty homes. But take a closer look at two of the supposed ghost cities: Rushan and Kangbashi. Rushan is a fast-growing city on the coastline. Kangbashi is a mining town, a.k.a. Ordos, with explosive development that’s often held up as the prototypical Chinese ghost city. Both have large swatches of vacant housing, and they have both been described as ghost towns. But the vacancy patterns, right down to the hour in each city, reveals something else: That Rushan is actually fully occupied during one season, and during holidays, but then it empties out in the winter and during the week. The explanation is simple: It’s not a ghost town, it’s a resort town. Construction on Tianducheng, in China’s Zhejiang district, began in 2007. It was meant to be a luxurious gated community resembling Paris in every way possible. The highlight of the town is its 108 meter replica of the Eiffel tower, but plenty of Paris’ other landmarks have been faithfully recreated here. The development was built to house 100,000 people and to draw rural families into a bustling metropolitan area. As of 2007, (the last time the population was counted), only 2,000 souls inhabited the gated compound. The population seems to be dwindling, leading local media to refer to Tianducheng as a “ghost town.” Its expected completion date was in 2015. So the Paris of the East, it turns out, isn’t quite a ghost town – it hasn’t had the time to develop ghosts just yet. In a few years, this now-quiet development could very well be chock full of Chinese residents ready to begin their high standard life style.