China Home Buyers Underwater; More Ghost Cities Emerge

Some homebuyers in China are finding the bids for their homes are below their cost. In the anecdotal cases cited in the article, people moving to a new city for work are finding their old homes are underwater.

房子接近成本价仍卖不出去 三四线楼市风暴难以避免 (Homes approach cost but still hard to sell, hard to avoid the storm in third and fourth-tier cities)

Recently, a few things happening around reporters do reference. Several friends a few years ago in Yangjiang, Guangdong, Shandong Weifang, Chengdu and other cities have been the work of home or bought a house, moved to Shenzhen think because wards, so this year intends to sell the house to the field. However, they also found that, after entering this house no longer marketable, even now these houses are close to the cost price in the sale, but did not sell three or four months to go. A friend told reporters yesterday, said that from the beginning to April, buyers view room even more low bids, the latest bid to buy a house has fallen below the cost of her. "Second and third tier cities in the house too much, I want to sell that house all newly opened several neighboring properties, and new homes compared to a small local second-hand housing simply no longer marketable, but also can not afford the price to sell. "the Friends say very worried about the local prices will barely, to the time the house will be "hit" in the hand.

Another message, SW recent research report shows that from the point of view of supply and demand than residential, north of Guangzhou-Shenzhen supply and demand than the four first-tier cities is 65%, which is relatively insufficient supply state of supply and demand than the second-tier cities is 116% , three or four lines of supply and demand than 125%, the national supply and demand ratio is 119%. Only from the point of view of supply and demand ratio, the relative lack of first-tier cities are still in the state, in other words, first-tier cities housing prices and perhaps some support factors. However, local supply and demand imbalance cities such as Yingkou, Ordos, Zhangjiajie supply and demand ratio reached 476.6%, 385.4%, 246.7%, storms of such property or the city will be difficult to avoid.

I did not know that housing supply exceeded demand in Yingkou by more than 400%. By some counts, there are now as many as 12 ghost cities.

辽宁营口也变“鬼城” 18万㎡小区零入住 (Yingkou, Liaoning becomes a Ghost City; 180,000 sqm of empty suburbs)

As night fell, located Minmetals Yingkou Coastal Industrial Base Howard Johnson Hotel podium lights, however, the room lights on top of the podium rate of less than one percent. The hotel is next to the one called "Laguna Lake Ming Ju," the real estate, the construction area of ​​about 180,000 square meters of residential areas has been completed, but the occupancy rate is still zero. Three project developers of this project Yingkou Tibetan Industry Group have developed an impasse.

This is the tip of the iceberg resulting from Yingkou's real estate "Great Leap Forward." "First Financial Daily" reporters found more in the future field visits in Yingkou, Evergrande (03333.HK), Kaisa (01638.HK), South Building (000961.SZ), Kerry (00683.HK), big room prices in local sales were encountered great difficulties, some small developers is more like years.

This quote from a cab driver sums it up:

"While looking at these real estate unoccupied, but in fact many of them have sold out." One taxi driver told reporters that "people rarely come to the coast, we went to this place is definitely not 'running the meter' because there are no return customers."

One reason for the over development is said to be the developers speed, which far exceeds the local government's development capabilities. However, there's also some cheap financing involved......:

A large number of investments in the Northeast developer told reporters: "For developers, a lot of sense to get cheap land reserves, not only being able to build a house, but also improve the overall valuation of the company, and then you can get a mortgage loans, which can in some way to explain why so many developers are willing influx of Yingkou. "

"The subject is difficult in a bubble aware of their dangerous situation, because the foam itself is a irrational exuberance." Associate Professor, Department of Investment and Insurance Huang Jianzhong Shanghai Normal University Business School on the "First Financial Daily" reporters, said, "ghost town "For the Chinese economy is dangerous" powder keg ", described as" the consequence of speculation, later suffer."

Speaking of the current market, commercially focused Soho China CEO Zhang Xin said the firm is "saving ammunition" and waiting for opportunities.

I recently (early April 2014) went through the SOHO Galaxy in Beijing. It is ever so slightly more occupied than it was last year, but it is still mostly vacant.

ZAHA’S NEW BEIJING BUBBLES

Galaxy Soho may be most beautiful at night, lit dramatically and glowing Beijing’s haze. But the night-time view also reveals a reality that neither the building’s owners nor Beijing’s government would like the world to know: it is almost completely empty. Despite official assurances that the city’s office vacancy rate is only 4%, the building’s lack of tenants suggests otherwise. Six months after its opening, Galaxy Soho's building manager, in moment of candour, told a Chinese real estate journal it had a 100% vacancy rate. When I walked through the building in October – one year after it opened – it was like a ghost town. The retail courtyard had just one lonely shop selling packaged ramen noodle and Pepsi. Behind Galaxy Soho’s aluminium and glass skin, there is nothing but air. So what are those four sensual towers - the gorgeous, shimmering symbols of Beijing’s real estate boom? They’re four giant bubbles.

Zaha Hadid's Galaxy SOHO

Since the grand opening ceremony on the 27th of October 2012, the Galaxy SOHO stands almost completely empty. Its square meter prices are constantly rising, and potential investors lose their interest. There are rumours that the Chinese development company SOHO is waiting to sell the commercial space for a better price. However, according to the information from the private investor who was interested in purchasing the offices there, the current square meter prices, combined with the real estate market fall, would not make the investment pay back in less than 10 years, making the commercial/office space and the entire building totally unattractive from the investors’ point of view. Moreover, the office spaces are criticized for being inflexible and too dark.