烂尾楼 are buildings which are abandoned before completion – a sign of a serious property glut in a land where the bubble never seems to burst. These buildings are a very common sight all over China and even first tier cities are not spared.
In this video, Mr Shi from Fujian brings us to see a huge cluster of 烂尾楼 in prosperous first tier city, Guangzhou. It’s such a huge cluster that Mr Shi described it as “monumental”. There are 165 buildings in this 烂尾楼 cluster.
The huge insult here is that to buy a home in Guangzhou, one might need to service the mortgage for a lifetime. Here, there are abandoned residential construction projects, wasting away.
Going around the perimeter fence, Mr Shi managed to find a way in. Some folks had treated the place like a rubbish dump, but Mr Shi said that he was worried about running into “bad guys”. Indeed, there could be illegal trades going on inside and they may not want any “witnesses”.
We need to understand that China’s economy is spurred by borrowing. Regional governments acquire a piece of land and borrow money from the bank to develop it. After developing, the land is remortgaged to the bank (at a new valuation) for an even bigger loan to develop it further. Some regional governments even managed to borrow an amount based on the projected value of the property. Greedy developers with connections rush and borrow to the hilt to build even more. Has anyone flipped the properties for a profit already? How many are left carrying the baby? Could they afford to write it off?