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China's real estate ghost towns

Friday, December 02, 2011 - 02:28

Dec. 2 - The dangers of a rapid slowing of China's property boom can be found in the Inner Mongolian city of Ordos, where new apartment blocks stand empty as real estate prices slump. Andrew Potter reports.

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From a distance, it's a modern skyline. Dozens of residential apartment buildings in the new Kangbashi district of Ordos, a city of 1.4 million people in China's north east. Trouble is, not nearly enough have been sold. It's become a virtual ghost town, a symbol of how a China's property boom can turn to bust. Local resident Yang Zhouluo (PRON: Yang Jou-luo). (SOUNDBITE) (Mandarin) 65-YEAR-OLD LOCAL RESIDENT YANG ZHOULUO SAYING: "The locals all loaned their money and all money has been invested in property. Now no-one can sell apartments, and the money is gone." Banks poured $181 million into the development of this area. China's government also chipped in $80 million for a museum, which was supposed to be the district's landmark building. But the demand isn't there, as local Fang Fan explains. (SOUNDBITE) (Mandarin) LOCAL RESIDENT FANG FAN SAYING: "Not many people live in this city and too many houses have been built, so on average there are more than three apartments for every single person. Unless there are many migrant workers in this city and this place becomes a suitable place for them to live permanently, only then will people decide to buy apartments and live here." re are many migrant workers in this city and this place becomes a suitable place for them to live permanently, only then will people decide to buy apartments and live here." Making matters worse, prices have started to fall in the old part of Ordos too. The city is an extreme example what's happening to property prices across China. An hour's drive from Beijing in Tongzhou City real estate prices here are being slashed. Nationally, home prices are expected to fall for a third consecutive month in November. But between 2005 and 2009 the average price had trebled, encouraged by a relaxing of government policy. Now the Chinese government and central bank are racing to try and stop the property balloon from bursting. Hui Jingqiang (PRON: Hui Jian-cheeang) is head of research at property consultancy firm E-House. (SOUNDBITE) (Mandarin) HEAD OF RESEARCH AT E-HOUSE CHINA, HUI JIANQIANG, SAYING: "In places such as Wenzhou and Beihai, government control, as well as the market price's drop and adjustments, are also very obvious. But they're not as extreme as Ordos. This may also happen to smaller cities where capital growth is drastic. But I don't think this is widespread in China." The Chinese real estate market makes up around ten percent of China's growth. It's feared a rapid cooling could drag the whole economy down. The idle cranes on the horizon stand as a reminder of just real that danger is. Andrew Potter, Reuters

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China's real estate ghost towns

Friday, December 02, 2011 - 02:28