One of the most fascinating things that I’ve seen in the media recently regarding property development are the incredible ‘ghost cities’ that are being developed in China. The first I heard of this was in 2011 when Journalist Adrian Brown of the Australian Dateline program visited multiple new cities that had been built throughout China. The statistics are incredible with reports stating that there are over 64 million apartments vacant across the country. The background to why these cities have been built is intriguing and somewhat complicated. Many experts theorise that it has a lot to do with China’s tax policy. With no local property taxes, governments still need to make money so this is largely done through the development of land. With land sales being illegal in China this works by the government leasing large tracts of land for development of these massive estates, the scary thing is that this happens sometimes regardless of other services and infrastructure being there to support such large cities. Throw into this mix the emerging Chinese middle class with excellent savings records and a non-transparent stock market and investment in property is an attractive option for many, either as an investment for themselves or as a future home for a child. It’s reported that many people purchase their property with cash, and with no mortgage or property taxes to worry about it could be seen as a relatively easy investment to sit on. The results of this are evident however, just take some time and view the following footage, it’s astounding.
The first report is the original from 2011 whilst the second is a follow-up that was broadcast recently in 2013. The third report from 60 minutes Australia gives a slightly different view on the development of China from the perspective of an Australian architect employed to work on the redevelopment projects. The final clip from 60 minutes US is also really interesting. I find the entire thing absolutely amazing and I’m continuing to find more and more information regarding this unique situation an entire country finds itself in. I’ll be fascinated to see how this develops over the next 5, 10 or 20 years.