Their real savings are much bigger than the number you got. A countryside worker moves to Beijing or Shanghai, certainly, they can't afford the housing price in the big city, but they can afford the housing in countryside. There is no "house property tax" for the first home. They only start testing in two cities, Shanghai and ChongChing, for property tax for second home.
The Chinese demographic is akin to the average wage-earning couple in Chicago paying cash for a $1.4MM condo on $70k income.
I only know they have limit of purchase Yuan with US Dollars, and you can deposit US Dollar and convert to Yuan in Bank of China in New York or LA, I think the limit is $5000. But I have not heard there is limit for purchasing US dollars. That is only for speculation on the two currency. If you are a businessman, certainly, you are free to convert and move your money back to US.
They earn 15% of their US counterparts, yet the average selling price of these Chinese city-apartments is actually higher than in the US. There is no way to make the maths work on those 64MM empty apts. Again, it's as though a US couple earning the average wage is purchasing a $1.4MM condo for cash. It's simply absurd. 5% of the total population (not simply adult wage earners) would need to purchase apartments to fill those 64MM, and they're still building. 7/1000 Chinese millionaires. 0.2% with a net worth of $250k! Infrastructure stim on a massive scale. When the japanese do a bridge they get toll revenue or fares from high-speed rail. The Chinese are simply building ghost towns. Everything ends badly... or it wouldn't end.
Hello Atticus, Hope your analysis is right, but the reality is the Chinese banks have not had the chance to use the word "Foreclosure" on home loans. So TIME WILL TELL.
Analysts used to say that about Pudong too. Now it is filling up. http://online.wsj.com/article/SB10001424052970204770404577080491863427170.html DECEMBER 21, 2011 Shanghai's Pudong, Once Soulless, Rises Up District's Ascendancy and Ongoing Success as a Financial Center Is Reminder of Still-Strong Property Demand in China By JAMES T. AREDDY SHANGHAIâPundits once mocked Shanghai's Pudong district, a purpose-built version of Manhattan, as overdesigned and underoccupied, evidence in steel and glass of a property bubble of historic proportions. Deng Xiaoping sparked the transformation of Pudong's riverfront of warehouses with a 1990 utterance: "Shanghai is our trump card." A decade later, Pudong was Exhibit A for critics of an urban-development model guided by state planners, a soulless district where 70% of the buildings stood empty. Visiting economist Milton Friedman called it "a statist monument for a dead pharaoh on the level of the pyramids." Today, as worries of a Chinese property crash are back in force, there is an unlikely bright spot: Pudong. The district's transformation into a vibrant nexus for finance, trade and entertainment is testament to factors like the strong momentum of Chinese migration toward urban centers. Pudong was conceived as an international gatewayâfronted by a world-class skylineâbut its foundations today rest on domestic trends, including leaders' development plans and an expanding middle class. For watchers of China's property fluctuationsâthe focus of much angst since shocks in the world's second-largest economy could reverberate around the worldâPudong's ascendancy serves as a reminder of still-vast demand in China for new office and apartment buildings. One big question is whether Pudong's "build it and they will come" approach will work as well in cities without Shanghai's advantages: a strong industrial base, widespread prosperity and favorable geography at the mouth of the Yangtze River. As grandiose new skylines sprout across China, new urban centers are also replicating the infrastructure that was crucial to making Pudong's makeover viable. Apartment prices have started to weaken across China in recent months, including in Pudong. Still, Chinese cities are riding a powerful urbanization trend. Each year, 17 million people move from rural to urban areas in Chinaâequivalent to the populations of the four biggest U.S. cities. Pudong's planners were able to harness this vast internal migration, attracting armies of workers who built the infrastructure, provided a pool of labor for its factories and filled its apartments. Two million people moved to Pudong in 10 years. Pudong was advertised as China's international window, a marketing tactic now widely copied. Hardly any Chinese downtown lacks a World Trade Center or plans for global finance. In fact, analysts say locals were far more important to Pudong's evolution than were foreigners, as they will be in newer urban areas. Sam Crispin's bullish reports on Pudong a decade ago made the property analyst a contrarian. Now, as director of China real estate at PricewaterhouseCoopers LLC, Mr. Crispin says growing talk about China's unoccupied "ghost cities" reminds him of the doubts many had about Pudong. "A lot of the commentary frankly was quite similar to the ideas that are being bandied about for the property market today," he says. "The reasoning is quite similarâwho's going to occupy all those buildings?" Mr. Crispin argues that the lesson of Pudong is how badly Chinese demand was underestimated. Real-estate development, he says, tends to produce "sensationalist" viewpoints. Within weeks of Mr. Deng's 1990 endorsement, the government unveiled a blueprint and earmarked billions of dollars to pay for it. A garish rocket-shaped tower higher than the Empire State Building was the kickoff project. Positioned at Pudong's tip, the Oriental Pearl Tower was a cartoonish totem for China's race into modernity and an emphatic counterpoint to the Bund, a strip of colonial-era buildings on the opposite Puxi bank of the Huangpu River. Twice the surface area of Manhattan has been constructed in Pudong since 1995 â120 million square meters of floor space by the official tally, including more than 70 skyscrapers. But according to international real-estate agency Jones Lang LaSalle, less of Pudong's grade-A office space is empty than Manhattan'sâ9.5% versus 10.3%. The space leases for $693 per square meter annually, nearly a tenth more than Midtown Manhattan. Initially, Pudong drew snickers faster than tenants. "The Shanghai Bubble," a 1998 essay by Joshua Cooper Ramo, compared the city's building "explosion" with Europe's postwar reconstruction. "The result is a kind of what-is-wrong-with-this-picture economics," the then-magazine editor wrote. Today, Mr. Ramo, vice chairman at Kissinger Associates Inc., calls Pudong the capital of Chinese "exceptionalism" and attributes its rise to the central government's use of the massive economic tools at its disposal. Gordon Chang, author of the 2001 book "The Coming Collapse of China," charged that Pudong's glitz masked an unsustainable model. "I'm definitely in the not-impressed category. You can always get growth when you spend money," he says. Still, spurred by 25 river crossings and other infrastructure, Shanghai's center of gravity has shifted. "You came to see they actually did what they said," says Stephen White, managing director of iaction, an architectural firm that initially built Pudong offices for international banks but now sees mostly Chinese take-up. Apple Inc. chose Pudong for its first Shanghai store. Walt Disney Co. is erecting the biggest-ever Cinderella Castle there. Citigroup Inc. and HSBC Holdings PLC own Pudong towers. Also arriving were tenants like the trade-development office of Changzhou, a Chinese city that uses Pudong "like a bridge" to engage foreign investors, says its director Thomas Zhang. Filling the district hinged on mindset changes for Shanghai natives like Yao Wei, a 40-something real-estate executive who long swore by the adage "Rather a bed in Puxi than a house in Pudong." Ms. Yao made one of her first visits to Pudong in 1994 to check a client's plan to rent restaurant space atop the yet-uncompleted Pearl Tower. "It's too early," she advised. A decade later, she offered the same advice to another client. But Ms. Yao now owns a modern riverside apartment in Pudong and marvels at its affordability compared with London. The twinkling cityscape from her balcony mesmerizes guests, she says. "They come to the building and say, 'Oh, this is Shanghai."
that was a great post. it made me think of the cold war and how the russians would put up cardboard tanks. our satellites than took pictures and the race was on.
Don't know about dropping 300k$ for one of these... Chinese products have a reputation of falling apart after a couple of uses: http://www.telegraph.co.uk/news/wor...ine-held-over-Shanghai-building-collapse.html http://www.youtube.com/watch?v=pktM__i-8IQ
I think sooner or later China is expecting some new visitors and a new industry like the dot com boom we had in 2000 . If they can sustain a segment of the young population and attract US and Europeans to china with jobs and opportunity they may be right in the long run. If they can get their economy growing and offer jobs and free airflight I know alot of young techies who would go in a second. Not to mention an apartment in shanghai. Its a curious situation.