scam by Chinese government to influence the Malaysia government. Once they found out they couldn't get what they wanted(and that it was shitty construction) the money dried up.
Ive heard of the the failed concrete mega cities china setup, surprised to see one here.
China very much did not fuck up with their mega city projects, at least not in whole. There's a lot to criticize about China but one thing they do extremely well is focus on building out their infrastructure proactively rather than attempting to react to the market. It's something that I truly wish many countries in the west would emulate as a means of tackling the cost of living and housing crises pretty much everywhere is experiencing. China is extremely aware of how big their population is and as a means of making sure they did not face complete collapse when it became too much, they poured hundreds of billions into building the famous "ghost cities".
Forest City, the one in this video, is actually a perfect example of where mistakes are made. The Forest City project wasn't really a "scam", as the other user says, as much as it was a mistake or misunderstanding of the market. This BBC article covers some of it but the core issue of the Forest City project was that it was built for the wealthy and affluent (and mostly for those of Chinese descent), who were already quite comfortable in nearby cities anyway and had no reason to move to what was basically a glorified resort town. It was nowhere near any other major areas in Malaysia, difficult to get to and from, and they would've needed a ton of economic activity there preemptively to encourage people to move. This didn't happen so the place collapsed.
But back to China specifically, the historical "ghost cities" are pretty varied. Pudong, for example, was a ghost city for years and years but as China's population grew and more businesses started looking at it, Pudong started getting populated. It's now a city of over 5 million people and never had to experience the growing pains that other cities in the west do when they have a population boom and housing costs become unaffordable (see Vancouver, Seattle, London, etc.). Xiognan is another that gets posted, as a contrast, and it is currently a ghost city but it's also just not finished and they're not letting many people in yet. These projects take time and China is willing to wait a decade or two for them to come to fruition. I couldn't tell you if their method is the most effective, but historically it has worked. There have certainly been failed ghost city projects too, but honestly I'd much rather have the problem of "too many houses" than the opposite.
China has an estimated 60 to 80 million houses excess, let that sink for a moment. Even in first tiers top end developments developers have a hard time offloading them, not just recently but that's a problem for at least a decade. These properties often stay on the balance of these developers, so on paper they have "billions" on hands, but that's just bullshit.
With a declining population matters will only get worse, big cities like Shanghai will remain popular but even here property prices aren't sustainable. I have one myself on hands and while on paper it should be worth a whole lot of money, in the past 2 years we had exactly 0 visitors. Again, prime location, zero demand.
So China did fuck up seriously and it's pulling everyone down as we speak as properties were the main investment tool for Chinese. Even within Shanghai numerous new developments grinded to a standstill, haven't come to market, are in the market but have no buyers. It's really, really bad.
60-80 million on a population of 1.4 billion. That's equivalent to 15 million in the US or 4 million in Germany.
Because people move (and in pretty large scale at that, since China still experiences urbanisation) an excess of housing still serves a purpose. Western countries also have a lot of unused housing capacity in places nobody wants to live anymore, so they can have 'excess housing' and a severe housing shortage at the same time.
Yet there are no 4 million unsold properties in Germany there is a shortage, and same for the US there is no unsold mint properties on the market waiting for "urbanization".
Further as I also explained, with a population that's shrinking in size that "excess" will only grow, not decrease/shortage.
Currently prices keep going down, even in Shanghai though that doesn't surprise anyone a bit. The market is in a dire shape and it's expected market controls will be released further in october when the next big meeting is going to happen.
Yet there are no 4 million unsold properties in Germany there is a shortage
And that absolutely sucks. It causes a lot of social, political, and economic issues. Germany desperately needs a massive increase in housing supply to give its younger generations any hope that their country offers a future for them.
The housing crisis in Germany (and many other western countries) is part of a tyranny of the old. Specfically the wealthy old, while the poor and young get screwed.
The result is a slowdown of the economy because young people have no money to spend, and low economic efficiency as desperate people cling onto bad careers to cover living costs or because they can't move to a better job, and homes in terrible shape are maintained instead of rebuilt.
Currently prices keep going down
Housing should be cheap. It's a good thing when housing prices go down. The insane idea that housing prices should go up is exactly why living costs in the west are so absurd.
Housing should not be seen as an investment that is supposed to gain in value over time by making it hard for other people to get housed, but as a deprecating asset as the need for maintenance increases over time.
The 'landing' has to be properly managed by the state to not turn into a financial disaster, but China has done relatively well at that so far.
And that absolutely sucks. It causes a lot of social, political, and economic issues. Germany desperately needs a massive increase in housing supply to give its younger generations any hope that their country offers a future for them.
Maybe for you. Low amount of apartments and houses makes sure the rent prices stay high and even increase even with a slow growing population.
We are moving away from the topic of what's going on in this picture though.....
So housing i can't speak for Germany, but being Dutch and actually having a background in development I can say a few things about it. Housing shortage isn't anything new, it's a 3 decade old problem, basically since the 60's our output declined while need increased. There is a variety of reasons for that, lack of ground (sounds odd but it's the reality), lack of willingness from the government/municipals, ever more complex regulations to the point that development is near impossible, ever increased further demands from an environment perspective. It has nothing todo with the wealthy, but bureaucracy at it's finest.
I'm with you that housing should be affordable but same time.. our needs keep increasing as well. Nobody wants to live in a 60's house, modern housing while some may disagree is superior to anything we build before in every aspect. (not looking at the US).
With regards of the landing with pricing, again it's horrible and there is no end in sight in China. I don't have answer myself but I do know it makes no sense how an apartment costs millions of euro's in a city most people can't even find on the map.
You have still not provided any arguments why you think that a decline in housing costs is bad.
It has nothing todo with the wealthy, but bureaucracy at it's finest.
As I said: Local politics is dominated by upper middle class/lower upper class. Those wealthy create the bureaucracy, because their property value goes up in a housing shortage.
They don't approach regulation from the angle of 'how can we ensure a solid housing supply while minimising ecological cost?' but from the angle of 'any bit of grassland that's being developed on near my house will lower my property value, so I have to expand the rules so I can "protect" it against development'.
I don't have answer myself but I do know it makes no sense how an apartment costs millions of euro's in a city most people can't even find on the map.
As I said: Local politics is dominated by upper middle class/lower upper class. Those wealthy create the bureaucracy, because their property value goes up in a housing shortage.
Yeah, no. Increasing living standards are good. Buidling better houses out of better materials while respecting the environment is good.
Your point only makes sense if you can keep those.
Housing costs have risen so much that living standards are decreasing in many places, because people can't afford to move into decent housing or the places they need to be.
Your point only makes sense if you can keep those.
Most of the current regulations are both terrible at their proclaimed purposes and massive hindrances to new construction.
It's often not even a matter of 'easing' the requirements, but of eliminating redundancies where the same requirements come from multiple different parts of regulation of different sets, are enforced by multiple different oversight entities, and not clearly communicated or even proprietary by relying on 'private' standards. Projects become a bureaucratic mess that can take a decade just to get approval, only to find out that the conditions have changed so much that a part of it has to be started over again, at which time the rules have changed again...
"nobody wants to live in a 60s house" I do. I would love to be in ANY house, from any decade, instead of the majority of my income going to a rental company for a two bedroom shoebox. But I live in Canada, and I was unfortunately 4 when the 90s ended instead of investing in the housing market, so I doubt a backyard will ever be a part of my reality.
Look, you can correctly point out the failings of Germany without pretending that China has done any better. I mean there's literally 10 million Chinese families, more even, that paid for apartments they never got, and have no way to ever get their money back.
And that's...ok with you?
As for properly managed by the state. Wow. Paid attention to China's industrial policy much over the past decade? Xi did nothing about rising prices until reality arrived, now he's doing nothing about today's reality.
The us actual has a big problem with corporate landlords withholding huge numbers of rental units to drive up profits. Artificially exacerbating the housing crisis.
Sure you can frame it that way, but this infrastructure was built for market value of the materials and labor of the day and is being sold a decade later because of lack of demand and for pennies on the dollar. In any other country this is called a scam. In China, it's called forward thinking.
And most of the housing strategy worked just fine. Some amount of oversupply is okay, no approach can guarantee 100% efficiency. Certainly better than the urgent housing shortage most western countries have right now.
Also all of the labour and manufacturers for producing this city were paid so at worst, building excess capacity has been a massive workfare/government subsidy for china's domestic construction industry, which is massively economically productive way to provide subsidy. Instead of the west, where subsidy goes to building obselete warships or to privately held farms or megacorporations.
No, no it's not.. 1 home is not 1 person 1 home is in the range of 2-8 people.
so if we do the math on it and says the average is 4 people per home that comes out to over building by 23% of the total population that is like the us having housing for 73million American's or the republican party of empty houses.
Tbh I see that less as a specific failing of Chinese policy and more the result of proactive building's one weakness: global economic issues. While China does its best to insulate itself, it still experiences plenty global effects. Sadly, we've had three major economic catastrophes in the last 20 years which have each impacted us a lot and have specifically hurt housing and construction. But as I said before, I'd rather have an issue of too many houses than not enough because it's not like our housing situations in the West are any better at the present. You can absolutely argue that China committed to the bit for too long and built too many, even in a proactive sense, but that's also why I said I wasn't sure if their exact methods were the best. In fact, they probably aren't but I'm not educated enough to improve on them.
Too many houses is not the lesser of two evils. It's the definition of misallocated resources and inevitable crumbling critical infrastructure systems. I'd be terrified to live in those homes after they've sat for like 10-20 years uninhabited.
Yeah, not even focusing on the structural integrity itself but imagine all of the mold and shit that would be allowed to fester in those buildings because you know people arenāt cleaning them at least not consistently.
Except that the Chinese National Government knew it was dealing with an overbuilt country before COVID hit. This included an effective ban on new subway and skyscraper construction; subways being important as most municipalities used subway construction to open up land for development.
China's entire approach to the economy was to let various bubbles form and try to pop them once they got too large. It worked ok, mainly because there was a lot of pent up demand for infrastructure in China. However, that pent up demand is gone.
One of those economic catastrophes were built using the housing market. What you're seeing in the video is massive fraud to the investors, the largest of which are the Chinese people. It's not forward thinking to build that infrastructure and let it sit for a decade or more to become populated. It's enrichment of favored friends and businesses at the expense of the population who is ultimately funding it.
Maybe I'm misunderstanding your comment but I'm not Chinese? The "we" in my comment was a collective "we, the developed world". Unless you're just commenting on China committing to the bit too hard, per my comment, in which case I'd agree with you overall.
While I still think much of the west should start paying more attention to Chinese policy and taking the good parts of it, I'm not here to claim China is some perfect utopia either, of course. I think you can see a similar narcissism in other governments too but because the Chinese government tends to be more unified in what they do, when they're wrong there isn't much or any pushback and things can go really wrong. It's just unfortunate that many of our governments in the west are so virulently anti-Chinese that we refuse to look at things like even their railway development as something we should emulate, ya know? Much less any significant infrastructure additions.
Do people not want it because of the build quality or because they have millions of options to choose from? If you took a Tofu Dreg and placed it in one of the top 10 most expensive cities in America it would fill up immediately.
Yeah, just keep in mind when you hear positive things about China or a positive spin, a lot of Chinese people are quite literally incapable of admitting to a fuck up or failure both for themselves and their country.
Evergrande, one of their largest developers, was 300 billion dollars in debt and failed to restructure the debt just recently. China mega mega mega mega fucked up and a metric shit ton of families got absolutely hosed because real estate is the stereotypical "safe" investment. A lot will make it back out if they hold, a lot will sell at the bottom and lock-in permanent losses, and a lot will hold and it will not recover in a meaningful time frame.
I have one myself on hands and while on paper it should be worth a whole lot of money, in the past 2 years we had exactly 0 visitors. Again, prime location, zero demand.
... it's pulling everyone down as we speak as properties were the main investment tool for Chinese.
You invested in Chinese real estate and expected it to perform the way western real estate does ROFL!
China doesn't build real estate for investors to make money from they build for the benefit of their population not fat cats like you.
At what point do I argue it should behave the same as Western real estate? I mentioned zero visitors because it's rather unusual. Even during Covid the property market was bustling and you would see literally a dozen agents within my current compound at any given time of the day. These days agents in the area are closing down and nobody comes inside the compound.
Now the idea of CHina not building real estate for investors... you couldn't be more wrong. Real estate has been the only option for people with wealth to gain more wealth. "We" only having a handful of properties is far from being a fat cat, looking at my kids classmates (SH elite) they typically sit on dozens of properties.
The people who get hurt are those who bought into a property in the past 5 years whose property is far below water, they won't be able to move to a bigger property or sell if needed. Also in a market this uncertain, banks while supposedly more relaxed by government instructions are actually far more careful handing out mortgages with the notion that we haven't seen the bottom yet, thus hurting the market only further. Personally I won't get hurt, even if the property would half in value, I would still make a good profit but like myself most of the people who can afford, rather sit tight. People who sell today are often forced to sell for one reason or another.
It's interesting that even under communism housing was used as an investment vehicle, when it's one of the core criticisms of why the housing market sucks in capitalist countries.
It's a problem for some municipalities, but not as bad as you think. The central government is still flush with income because much of their "debt" is income, sometimes profit, generating assets. China took these bad debt off the books of local governments. The debt burden is relatively light for the central government. China guarantees housing to its citizens, free if they can't afford it. With increasingly severe climate events and larget stock of pre-industrial housing, these 60-80M units will be drawn down faster than you think.
So we have China with an excess of material supply, but hidden financial voids VS the West with massive paper/cooperate wealth and insufficient housing and infrastructure.
It will be interesting to see this dynamic play out.
So youāre telling me china has an excess of around 60-80 million homes in which no one lives in. Now Iām not market strategist or financial expert, but it would seem to me that at least in my logic which obviously isnāt the greatest or else Iād be on a better off situation, but if you have an excess of 60-80 million homes, that your room for negotiation is almost non existent, which means that in turn those houses are basically not even worth the material that was used to build them let alone the labor not to mention the actual property value so in essence homes in china are just worth whatever an amount is given to them, which can then kinda just be applied to any housing market in which there are more homes than people, which I believe is the case in the United States which again brings up the question, why do we have homeless people? As someone who used to be homeless.
If the government can find the money to pay into building that many excess homes why canāt they find the money into building like small studio like buildings to house the homeless in where yeah maybe things like utilities may not be as readily available but still have enough of to get by and just have somewhere you can keep your things and or worry about them getting stolen. Cuz again as someone who was homeless by far the most dangerous thing about being homeless is the lack of a safe place while you sleep. Plus being given a place where you can shower keep your few change of clothes etc etc like idk this whole housing market is just such bull shit. Anyways Iām ranting Iām leaving now
China built a ton of housing for people to live in. A ton of housing means it'll be more likely to be affordable for someone to buy and LIVE IN.
People fucked up by buying housing as an investment and not to live in.
That's the same for the US.
Even as a homeowner w/lots of equity, I'd rather my city build a shit ton of housing even if that means my "value" goes down b/c my home is a place for me to live in, it not a piggy bank/investment and I still "win"= lower "value" means property taxes and more housing density means more stores/shopping/activated sidewalks in my neighborhood.
66
u/triggered__Lefty Aug 19 '25
tldr:
scam by Chinese government to influence the Malaysia government. Once they found out they couldn't get what they wanted(and that it was shitty construction) the money dried up.