Saturday, November 14, 2009

Central Planning & Ghost Towns In China.....

Fits perfectly to an earlier post ( see China’s Loan Growth Isn’t Boosting My Confidence In China’s “Green Shoots” Michael Pettis ).

Paßt hervorragend zu einem früheren Posting ( siehe China’s Loan Growth Isn’t Boosting My Confidence In China’s “Green Shoots” Michael Pettis .

China Digital Times

China’s economy is continuing to grow despite the global recession, helped by a massive government stimulus package of $585bn.

But doubts remain whether such strong growth can be sustained by public spending alone.

Al Jazeera’s Melissa Chan reports from Inner Mongolia, where a whole town built with government money is standing empty

> Here one interesting anecdotal evidence from a fund manager via M.Pettis.

> Hier eine recht interessante Einschätzung eines Fondsmanagers via M.Pettis

Notes on a real estate trip in China

I don’t know how much you travel around China. T and I do a fair bit, and most recently we were in Guiyang. I thought I’d seen insane excess in the past – 200 thousand square meter malls completely empty next to apartment complexes with 40 thousand units and 30% occupancy rates, etc. etc.

But what we saw over there is rather hard to fathom. It seems the Guiyang city mayor had the same idea as the Shenzhen mayor – to move the old downtown to a piece of undeveloped land.

Of course Guiyang has a quarter the population and probably a quarter the per capita income of Shenzhen. They built sprawling new government buildings about a 20-minute drive north of town. And then the residential high rise projects started going up. From driving around the area, we figured well over 100 20+ storey buildings.

What was most distressing was that the development has been totally uncoordinated – a project with 15 buildings here, in another field two miles away a project with one building, another mile in another direction three buildings, sprawled over what was easily over 30 square kms. of farmland well north of town. Every building we got close enough to see was either incomplete/under construction, or empty. Our tone gradually went from “Haha, another one!” to “Oh my God, another one.” We conservatively guesstimated that we saw US$10bn of NPLs in one afternoon.

The only buildings that were occupied were six-storey towers built to accommodate the peasants who had been displaced by the construction.

Back in the city proper, every neighborhood we saw was a convulsing mess of buildings being torn down, new ones being built, and unfinished high rises starting to crumble
> Another comment from a friend of M.Pettis

> Hier eine weiterere "amüsante" Beobachtung....

"By the way almost no one I know trusts the official vacancy rates.

A friend of mine who works in the financial service industry in Shanghai took advantage of the recent total solar eclipse to do his own vacancy rate analysis.

His message to me: “Today’s eclipse provided a perfect opportunity for keen-eyed observers on the ground to see how many floors of the nternational Financial Center (aka The Bottle Opener) are actually lit and ready for use: 25% at most.

Hope that’s of use the next time you comment on speculative office building.”

World's Largest Shopping Mall Sits Vacant Mish

The World's Largest Shopping MallThe world's largest shopping mall, in Guangzhou, China, is almost entirely empty

> I´ve written earlier about the CRE in Beijing ( see Beijing's Olympic Building Boom Becomes A Bust )....

> Hier ein paar Fakten zum Zustand des gewerblichen Immobiliensektors in Peking ( siehe Beijing's Olympic Building Boom Becomes A Bust )

By Rodman's calculations, 500 million square feet of commercial real estate has been developed in Beijing since 2006, more than all the office space in Manhattan. And that doesn't include huge projects developed by the government.

He says 100 million square feet of office space is vacant -- a 14-year supply if it filled up at the same rate as in the best years, 2004 through '06, when about 7 million square feet a year was leased.

Big property bubble forming in China, warns leading developer FT
"In Manhattan, they have vacancy rates of 10-15 per cent and they feel like the sky is falling, but in Pudong [the central business district in Shanghai] vacancy rates are as high as 50 per cent and they are still building new skyscrapers," she said.
> It seems clear that the "magic´" race to achive the 8-10% GDP growth target is going hand in hand with massive mailinvetments.....Looking at the 2009 credit "explosion" i have some doubts that this has changed.....I have to repeat myself.....I wrote in February ( see Number Of The Day "Credit Explosion In China" ) "This almost surreal number is signalling a real panic among the leaders..." & "I wonder what percentage of the loans will default"....There is nothing to add ( except the percentage will be sky high ) UPDATE: Is China Frontin’ On Us All?

> Es scheint ziemlich klar das die 8-10% zentige Pflichterfüllung des BSP Wachstums über Jahre zu massivsten Fehinvestitionen geführt hat.... Den Kreditzahlen dieses Jahr zu urteilen dürfte sich das nocheinmal beschleunigt haben......Mein letzter Kommentar hat leider noch immer Bestand.....Ich schrieb im Februar ( siehe Number Of The Day "Credit Explosion In China" ) "Diese unheimliche Zahl signalisiert ne echte Panik der chinesischen Führung...." & "Möchte nicht wissen welcher Prozentsatz dieser Ausleihungen in 24 Monaten als notleidend deklariert werden muß......" Nach aktueller Datenlage ist dem wenig hinzuzufügen.... Höchstens die Gewissheit das die Panik noch zugenommen hat und das eine gigantische Zahl dieser Kredite implodieren wird".... UPDATE: Is China Frontin’ On Us All?

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