You have to study up on the evolution process in Japan and Korea to
understand the markets in China. They all have the same system, i.e.,
the Chinese system.
1. Property is actually the system of taxation. The government owns
most of it personally, all firms who build the properties are
government, and the prices get very high. This is actually the way
they get taxes. They’re just not called taxes. They’re called property
values. The lie in this word is that people think the real estate
markets in SE asia are ruled by the free market or even a semi-free
market, which is not true. For example, China has the highest rate of
vacancy in the world, at 1/4 of all housing. If it were a market, the
prices would simply fall and that would be that. Also, China has the
lowest rent rate to buy rate ratio, i.e., it’s usually much much
cheaper to rent and keep renting instead of buying. Buying is still a
great investment, but this means for us that renting out the property
is useless. William and I could get 200 bucks each a month for our
apartments. Yippee. That might not even cover the cost of upkeep. You
get 2,500 bucks a year, say, then have to pay 5,000 every two years to
refurnish the place from Chinese damage. Doesn’t make any sense.
But if you see all of this in the light of SE Asia, it’s the same old
thing. The prices will go up and up during the whole major period of
development, which still has at least 15 years in it in China, IMO. We
LIVE in China. We KNOW what the feeling is on the street, and Chinese,
no matter how dumb, insane and immoral, are still intent on some form
of progress in a very rapid form. Next year, the watershed will be
crossed and for Chinese in 1st and 2nd tier cities, they’ll enjoy real
gains in standard of living (including air and water quality).
Modernization at this point will start to make sense to them.
Development has already required since 2008 that they stop just
producing cheap junk and exporting. The whole economy has been
shifting from export to a regular economy these past three years. The
change has been fast. To make gains for the domestic market, there has
to be more responsibility in product quality. To squeeze more profits
out of things, they’ll have to get better quality. For local firms to
compete with local firms on the home territory, they have to create
guilds and restrictions to push others out, and a good excuse for
doing that is increasing environmental regulations. In short, the next
step means cleaning up.
And about the revolutionary tendencies in China, they kick in every
couple hundred years. Remember that the communist part of China is the
most capitalist party in the whole world right now. The big changes
have happened within the current framework, and they will continue to
do so for quite a while. Not only does Joe twelve-pack (of cigarettes)
on the street want fast progress, but the whole government who is made
up of the very same people wants it, too. They won’t stop for some
dumb excuse. If something stands in the way, they’ll blow it up. This
is the attitude I experience every day on the street. Experience^tm.
I’ve been seeing books about the imminent collapse of China since I
came here. A best-seller in 2006 and 2007 was about the immenent crash
of 2010. Then 2010 came and the guy who sold the book was laughing.
All I can say for the naysayers of the Chinese economy at this stage
is “you wish”.
“The economy is collapsing this year. It just can’t keep going.”
– “You wish.”
Back when I first got to China, there was a very popular sentiment that
1. China would have revolution because there isn’t a common belief system
2. China would go into depression because they’re building too much
(and supply and demand blah blah. Oh but wait, the real estate market
isn’t a market at all…oops)
I don’t think the prices of our places will gradually decline in 2014,
but they’ll be through the roof. The subway stops represent real
value. The space inside the subway is the only clean space in the
city. People love subways here. It’s public and fundamentally solid as
it’s supported by millions of travelers. Being on a stop and in the
middle of the city will be valuable for 30 more years at least. SE
Asian urbanization means that most of the farmers move to the cities.
Well 56% of China is still farmers. The move has only just begun.
Yes we’ll get lots of news about crashes in the real estate market,
yet not everywhere crashes. Mostly just the places outside solid city
areas with good infrastructure crash. This makes sense because every
Chinese wants to live in a big city. This is also being pushed by
vagina. Chinese women say they won’t marry a man who doesn’t have
property in a city with big dick skyscrapers. that’s what the vagina
orders. that’s the new-world order. Urbanization is going way way
strong, and it’s far from complete. I’m banking on it. I’ll sell my
place for more than a million, easy. If for some random or stupid
reason the price is low in 2015, I’ll wait till it goes up again.
In economics, you never lose on property as long as you don’t buy
right before the crash. Will and I bought well into the cheap zone.
Property values are more than stable in China because the government
wants its money and the uneducated farmers want to move into the city.
The trend is so strong and the numbers so healthy, I have no doubt
Population of Nanjing in 2000: 3 million. Now? Ten million. Still
going up. Thousands move here every DAY. Are farmers willing to pay?
They’d sell their LIVES. Is this going to change? Well by Korea and
Japan, not until more than 90% of the population lives in the cities.
Just czech out that dragonwoman tennis player. Won the french open at age
29 or something. Quit the national team because there was no money in
it. Just whackin for money. Look at the determination of these Chinese
to get more more money, more and more into the cities. and that
sentiment ain’t gonna cool down in just a couple years.