China’s Empty Cities House 64 Million Empty Apartments
These are satellite images of one of China’s
newest cities, a sprawling urban centre complete with public buildings, hotels and apartment
blocks and this is the view from the ground. 11am on a Thursday morning and Zhengzhou’s CBD is
deserted, shops unoccupied, hundreds of apartments uninhabited.
All the shops in this mall are empty, not
that that worries the government, because they’re simply more concerned with maintaining
economic growth and one way of achieving that is building cities like this one. The big
question, though, is how much longer all these shops and properties can remain vacant?
But all around me, the construction of this
metropolis goes on and here in the southern city of Dongguan, another example. This is
the South China Mall – toy shop owner, Tian Yu Gao, is doing his best to keep his spirits
up but is already after 2pm and he’s yet to serve a single customer.
Do you get very lonely in here?
It is a bit boring looking after the shop
here — there are too few customers.
But then, slow days are what he’s used to.
When was the last time you sold something?
Yesterday — I sold one toy. Once it took four or five days
His shop is a rare sight in the Great Mall.
The majority of this vast shopping centre remains as empty as it did when it opened
six years ago. Back then, developers boasted that it would become the world’s biggest shopping
mall, with plans for 1500 shops that would attract 70,000 shoppers a day – the mall was
heralded by the New York Times as proof of China’s astonishing new consumer culture. But today,
the not so great Mall of China, as it is known, is a glaring indication that this consumer
culture has been grossly overestimated.
A gondola ride through the mall lasts 20 minutes and takes you past an unsettling and almost
unending vista of emptiness. For the few workers kept on to maintain this vast and now eerie
complex, it is boring and lonely work and already, there are signs of creeping neglect.
Even filming an empty shopping mall is a sensitive issue in China – police arrived and ordered
us out but the mall is so vast, it was easy to slip back in unnoticed and just like in
the city of Zhengzhou, building goes on.
Despite repeated requests, the mall’s management refuse to talk to Dateline, but Tian Yu Gao
wonders if the mall may become another victim of the government’s obsession with big infrastructure
Do you think that the South China Mall will be around in five years time?
It is hard to tell, we’ll have to see what
happens next year. My feeling is, they said Level Two was all leased out, if it is true
and the customers come, there may be a chance, otherwise it’s hopeless.
We’re on our way to another new city, Daya Bay,
a three-hour drive from the not so great mall. As you enter the city, the touts pounce and
a well-rehearsed sales pitch begins.
Inspecting properties? Two minutes from here. Have you seen any?
In May we will have another site for sale
in the city centre.
Daya Bay is a city carved out of agricultural land and designed for 12 million people. That
ambitious forecast, though, appears to be wildly out of kilter with reality because,
according to even China’s State-controlled media, 70% of these new units remain unoccupied.
Is China experiencing a property bubble?
Absolutely. A property bubble like which
I don’t think we’ve ever seen.
Bigger than the one in the United States?
Yes, I think it will make the United States pale in comparison. It is said that there are 64
million empty apartments in China.
Gillem Tulloch is a Hong Kong-based analyst who has been investigating China’s residential
and commercial real estate market. He maintains that there’s massive oversupply and over valuation
of properties right across China.
It’s essentially the modern equivalent of building pyramids. It doesn’t really add to
the betterment of lives, but it adds to the growth of GDP.
And maintaining economic growth is the government’s
number one priority.
It’s basically happening because China is a command economy and the Chinese Government
can dictate where the resources are spent.
And so, if the order goes out to build, local governments build?
That’s right. If the central government a GDP target,
they have to meet the target and the easiest way to do it is just to build.
Isn’t all this construction a good thing?
It’s creating jobs and getting the economy moving? That’s a good thing?
People forget that it is not the quantity
of GDP that matters but the quality and essentially, they’re building things for where
there’s no demand and so they’re creating a large problem for the future.
Prices for units here range from $70,000 to
$100,000 – a fortune in a country where the average worker’s annual wage is around $6,000.
But units here are selling – the vast majority as investment propers whose owners live in
other parts of China. The agent bundled this prospective buyer away before we could talk
You’ve come today – you’ve had a look around – what was your impression?
It’s pretty alarming. It’s incredibly interesting
– I don’t think that there are many places in the word like this. I mean, we’ve seen
empty apartments, empty condominium projects.
Do you imagine that any of these apartments will be occupied in five years?
I think that the occupancy rate in five years
will still be around 25%, but if they bring the prices down to close to zero, some people
will move in.
Well here’s the thing – you got millions of Chinese who, like people anywhere else, they
dream of owning a home, and they can’t.
That’s right – these are far too expensive for them.
Millions of expensive empty homes and millions
of Chinese who can’t afford to live in them. George Jiao is one of them – his rented home
lies at the end of a narrow alley in the capital of Beijing. He knows that one day soon, all
this will be demolished. In its place, more upmarket condominiums like the ones that tower
above his neighbourhood – a daily reminder of his own frustrated efforts to buy a home.
He and his wife live in a single room off a small courtyard.
10 households, two people per household.
There’s a communal sink and toilet – there
is no place for children here, which is why their daughter remains with his parents in Sichuan –
they see her once a year.
It’s no good, we have been working in Beijing for years, we want to but a property but prices
are too high — honestly, we just can’t afford to buy. People speculating in the market
have pushed prices too high — we need the government to intervene.
George and his wife both work six days a week
in a beauty parlour, their combined salaries are around $900 a month, of which a quarter
goes on rent. He says owning a home should not be a dream but a basic human right.
If the government considered us and provided
budget housing as part of our human rights – that would be the right thing to do. I am
not optimistic now, I don’t like what the government is doing.
Zhao Gang also knows about the difficulties
of home ownership, he shares a two bedroom apartment with nine other people, including
a married couple. Ironically, he’s a government property developer. Three men sleep in this
room with Mr Zhao sharing a bed – none of which is exceptional here in China, until
you remember all those millions of homes that are empty. Something he didn’t want to talk
I can’t tell you my views because I work in the property sector, I know a lot about
it and if I talk about it I will get into trouble.
But trouble is looming if the lack of affordable
housing continues, warns this prominent sociologist.
What worries me most is polarisation, according to Deng Xiaoping, if it leads to polarisation,
then our reform has failed. Right now, China is polarised — it continues to be polarised
— that is a big worry.
He fears a deepening of social divisions.
It is clear that polarisation will cause conflicts in society — poor people may come out and
start a revolution.
A two-hour drive from Beijing, I’m being shown a duplex with an asking price of almost
$300,000. It’s a development called Green Island, though it is anything but outside. From the
window, a smoggy view of another old neighbourhood developers have earmarked for demolition.
So this will go next?
An unlikely prediction, considering buyers
are required to pay 50% of the asking price upfront and the balance within three years.
Such stringent terms, which keeps so many workers out of the market, are also the reason
why China has yet to experience a US-style credit implosion.
This is a good place for you high-income earners,
it’s quite and
the environment is good.
Who will come to live here?
People who can afford a house in Beijing.
But they haven’t come yet?
And only months after the first tenants moved in here, the For Sale signs and For Rent
signs are already appearing. China’s authorities are trying to cool their overheated economy
with a series of financial controls. But there are dangers.
It can’t stay this way because we’re in the
upswing of a bubble, and when the bubble bursts, it will impoverish vast numbers of people.
Will there be anger and disgruntlement?
Yes, it increases the chances that you get
some form of social unrest.