‘Ghost towns’ pop up in northeast China: report
As Chinese cities and towns pursue economic growth through ambitious land development projects, some of them have inadvertently turned themselves into “ghost towns,” with a particularly high concentration in northeast China, according to a newspaper report.
A map compiled by the Hong Kong-based South China Morning Post, shows cities where uninhabited housing units proliferate amid rapid urbanization and these appear to be concentrated in areas where the local economy is heavily dependent on natural resources, heavy industries and farming, and not diversified enough to offer a wide range of employment.
“Unlike ghost towns in the West which are laid waste by wars, natural disasters, disease or failed economies, the ones in China are created out of haphazard and rushed projects by local governments attempting to boost GDP growth and reach urbanization targets,” the newspaper said in a report titled “Chasing ghosts,” published last month.
Housing revenue is a key pillar of China’s economy, the report said, citing Chinese government data that indicates that nearly 12 percent of China’s GDP in 2014 came from new home sales, a similar level to the previous year.
Based on property research by brokerage CLSA, that figure is more than the 10 percent recorded in the U.S. and even higher than the 8-9 percent in Hong Kong from 1997-1998, before the property bubble burst, the report said.
Debate on Ghost Towns
prolif- eration of massive construction projects in provincial capitals, however, has triggered debate about whether these cities are producing more and more ghost towns, the South China Morning Post reported.
Citing CLSA research on China’s ghost towns from 2014, the report said the average vacancy rate in China for property completed from 2009 2014 was 15 percent — equivalent to 10.2 million empty units — which on the surface is nothing to worry about considering the U.S. vacancy rate stands at 10 percent.
“The bigger concern is the 17 percent vacancy rate in remote, low-value properties,” the report added.
The CLSA report, which suggested that small Chinese cities would get even emptier over the next five years, was based on an on-the-ground study of 609 construction projects in 12 Chinese cities.
The ghost town map was based on a model devised by Chinese economic researcher Chen Qin, with Ordos in Inner Mongolia, the most well known of China’s ghost towns, ranked first based on his second indicator — a result confirmed by the CLSA report, which predicted that the vacancy rate in Kangbashi (a new town in Ordos) would continue to deteriorate, according to the report.
Chen uses two indicators in his model to predict potential ghost towns in the near future. The first is the future supply/demand ratio, which can be exaggerated if demand is extremely low.
This map is based on Chen’s second indicator, in which he measures future oversupply (in some cases, undersupply) against the number of existing homes in a city. However, his calculation of the number of existing homes covers only occupied ones, as nationwide data on vacant homes is not available.
Despite its limitations, this model could help shed light on potential ghost towns, or places where housing supply will substantially outstrip demand by 2020, the report said.