Ghost Cities Explained
Until I came across this post on redalert.wnd.com I neber even heard of the phrase "ghost cities". But in China they are all the rage! Remarkable as it seems, photographs of these "ghost cities" – after countless billions of dollars spent on their design and construction – reveal nobody lives there.
We're talking block after block of empty houses and apartment buildings, glamorous public buildings, magnificent public parks and sports complexes, even art museums, remain entirely empty.
Business Insider estimated that China now has an inventory of 64 million vacant homes.
The Mail in London estimated that China is building up to 20 new ghost cities a year on the country's "vast swathes of free land."
Business Insider speculated that the Chinese need to put their money somewhere, so developers have decided to build, as a place to store the wealth, even if the Chinese building these cities do not intend to live in them and there is no prospect they can find renters. Still, the phenomenon of China building these elaborate ghost cities is hard to understand.
"The result of this unnecessary expansion is that we have perhaps the first outposts of civilization that are impractical to the point of being unusable, as many of them have housing prices so high that even if there were people available to fill them, it would be impossible to do so," Anthony D. Poerio wrote in his entry on the website ScallyWagAndVagabond.com.
"The money simply isn't there, and ideally never will be," he said. "Otherwise the investments of an entire country's wealthy would be utterly devalued (unless China someday controls so much of the world's wealth the cost of living in these cities becomes affordable only to them." Obviously, these ghost cities are not being built in China to be inhabited. Instead, they are being built to embody capital in a physical form, as bizarre as that idea sounds.
"It might all seem mere nouveau riche folly, were it not for China's national goal of moving hundreds of millions of rural residents to big cities over the next decade, in the hope of creating a large middle class," the New York Times reported.
Still, Patrick Chovanek, business professor at Tsinghua University, insisted to the Times that the building boom is being driven by frenzied investors, not by the housing needs of millions of migrating workers.
People are using real estate as an investment, as a place to store cash – they treat it like gold," Chovanec said. "They're stockpiling empty units. This is going on in cities of virtually every size."
Kind of reminds me of the building boom in the mid to late 1900's when I would see the building of strip mall aftger strip mall, and pffice building after office building being built, but with no tennants. That trend has ground to a halt with the bursting of the housing bubble. Will China reap a similar bitter harvest?