Unreal...China’s ghost cities?

Have you seen news stories or read articles about China’s ghost cities? I got sucked into reading about them this week, and actually couldn’t believe my eyes.

As a real estate investor I have vacant properties from time to time. We all do. Vacancies are an integral part of the business, whether it’s office or industrial space, or single-family or multi-unit housing. Vacancies happen.

But I can assure you that I don’t set about to make them happen on purpose. I don’t buy property with the intention of letting it sit vacant for years, although it has happened in my portfolio more than once.

What really sunk into my head this week was the brutal intentionality and the immense scope of China’s building projects, not one, mind you, but many. The Chinese government has literally built a web of full-blown cities with the intention of relocating millions of people from more remote parts of China into these new cities in the near future.

Some of these cities have a few thousand inhabitants already, but most of them are GHOST TOWNS. They are devoid of human inhabitants. That is just spooky.

And the most amazing thing to me is that investors have bought up some of the empty shopping malls, apartment buildings and office complexes ON SPEC. They are investing in empty properties with the confident expectation that there will eventually be inhabitants and tenants and income. Oh, and profit.

My head is still spinning. I like to think I’ve had long-term vision over the many years I’ve been investing in real estate, but the Chinese have got me (and even big, commercial real estate investment groups) beat by a few light years.

The Chinese government is creating an intentional future for their communist country, while our US democratic and capitalistic country is spontaneously market-driven. Past and present data drives our commercial, industrial and residential development here in the US, not a stark, futuristic, utopian vision.

Stark is an understatement, to say the least. Do a Google image search for “China’s ghost cities” and you’ll find tons of photos.

What you may not find as of yet, however, is a lot of information about what’s really going on with them. I did find a juicy tidbit today, and that’s what prompted me to write this post.

An Australian blogger wrote, “There will be few, if any, new ghost cities in the future because former Vice Minister of the Ministry of Housing and Urban Development, Qiu Baoxing, says leaders will be held accountable.”

Whew, I wouldn’t want to be on that team of leaders who made plans for ghost cities and carried them out to incomprehensible expense… I would not want to be among them right now, and I would not want to be one of the private organizations with investments in vacant buildings they have to maintain.

Oh, at least one of these municipal monstrosities is in Mongolia. Heard of it? It’s really cold there. I’m thinking they are probably paying for some form of heating in the cold months, as well as other year-round maintenance expenses to avoid damage and loss, aren’t you?

Unreal.