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An Oversupply Of Empty, Overpriced Condos

A report from the Star Vancouver in Canada. “A series of house fires in the last 11 months have sparked a debate about the effects of property speculation in Vancouver, including a call from one political party to ban Airbnb altogether. Public suspicion, seen on social media and elsewhere, is focused on five properties that each embody some element of Vancouver’s housing crisis. The fires happened in multimillion-dollar houses that were either under development; were sitting empty; were being rented on the short-term rental site Airbnb; or had multiple, high-interest mortgages from unconventional lenders.”

“Two of the homes were for sale at the time they caught fire, and all but one of the fires have been deemed suspicious by Vancouver Fire and Rescue Services.”

“‘The trend is obvious: Buildings or houses that are primarily empty, often recently purchased, often back up for sale, tend to have fires, and it’s been happening often in our city,’ said Jasper Wright, a Kitsilano resident who lives with his wife and two young children just a block away from the most recent fire, which happened at 1848 Macdonald St. on Aug. 23.”

“There is no indication that anything connects the five fires at the heart of public scrutiny, but a look at the ownership and history of each property does reveal different facets of Vancouver’s overheated real-estate market.”

From Better Dwelling in Canada.”Canadian real estate sales continue to cool, after spending years at record highs. Canadian Real Estate Association numbers show August sales came in lower. That’s on top of last year’s declines. This represents the worst August since 2013, when Canada had an oil slump. Yes, we’re seeing sales nearly as bad as an oil slump while the economy is booming on paper.”

“The fastest shrinking sales numbers were all located in British Columbia. Fraser Valley reported 1,102 sales in August, a massive 39.52% decline from last year. Vancouver reported 1,961 sales, down 36.7% from last year. Victoria reported 570 sales, down 17.63% from last year. China’s capital controls, prices detached from local incomes, and anti-speculation measures are taking their toll on sales numbers.”

From AEC News Today on Cambodia. “In January 2018 Chinese Premier Li Keqiang visited Cambodia and oversaw the signing of 19 new development deals. The deals were announced just a few weeks after Chinese firms pledged to invest an additional US$7 billion in Cambodia.”

“Last year 3,488 high-end residential units such as luxury apartments and condominiums were added to the Phnom Penh housing market. Another 15,688 luxury units are forecast to be complete in 2018. But questions are being raised about the long-term sustainability and economic effectiveness of Chinese real estate projects in Phnom Penh, which are criticised for mostly benefiting the nation’s affluent.”

“While few of the large real estate projects in Phnom Penh provide exact figures on the nationality of their tenants, it is estimated that about 90 per cent of units are sold to Chinese citizens. Another concern is the true intentions behind Chinese real estate investments in Cambodia.”

“Observers note that more than half of the luxury apartments and condominiums in Phnom Penh bought by Chinese nationals are paid for in cash. This could suggest that the acquisition of such properties is a front for money laundering by wealthy Chinese citizens who are worried about their home country’s mounting debts and unpredictable authorities.”

“Being primarily a cash economy, Cambodia has lax internal banking controls and few enforced policies against money laundering. This makes it an appealing environment to any wealthy Chinese businessperson who wants to usher their excess money out of reach of the Chinese government, which has been targeting corruption on an unprecedented scale in recent years.”

“The growing Phnom Penh housing bubble could very well result in an oversupply of empty, overpriced condos in the capital, while much of the Cambodian urban population remains locked out of the housing market.”

From The Asia Times on China. “The southern Chinese city of Shenzhen is still reeling from the mayhem wreaked by Super Typhoon Mangkhut, when downpours, deluges and fallen trees brought the tech boom town to a standstill on Monday – well after Mangkhut made landfall in Guangdong province on Sunday afternoon.”

“Shenzhen also saw gaggles of ‘typhoon refugees’ who sought shelter in schools, in public auditoriums and even inside subway stations over the weekend. But make no mistake here, these ‘refugees’ were by no means poor.”

“They flocked to temporary shelters because their cavernous condos, usually on high floors of upmarket residential towers hundreds of meters above the ground, were either partially inundated or swaying heavily because of the violent gales.”

“And ironically, a dollop of deep remorse prevailed among these deep-pocketed homeowners, who once made a beeline for deluxe homes featuring unobstructed, sweeping views of Shenzhen Bay or the Pearl River Estuary. After the delicate floor-to-ceiling windows gave in to the squalls, it was said that these owners of the most expensive homes in Shenzhen spent the past weekend battling seepages and salvaging bespoke furniture and wardrobes from their windswept homes during the day, and spent their nights in classrooms, station concourses or community halls requisitioned as temporary shelter centers for the homeless.”

“Local papers reported that owners at the One Shenzhen Bay, where the price of a mid-sized apartment inside the glitzy glass-curtained towers could fetch up to 40 million yuan (US$5.8 million), had to climb down 45 floors from their condos to the ground amid a power outage, and the only reason for their panicked exit was that the swaying tower amid howling winds made them dizzy.”

“What added insult to their injury was that they soon found their sleek sedans of foreign marques were also soaking up muddy water in the submerged underground parking garage.”

“Some property agents in the city now fear that prices and transactions of luxury apartments in high-rise blocks will soon take a battering, since Mangkhut has riven the fancy veneer and laid bare the potential peril of these pricey homes.”

“”By comparison, wage-earners who dwell in far less expensive units in low-rise tenement blocks in Shenzhen’s less salubrious districts relished their typhoon weekend in the safety of their cozy homes as well as their extra day off work on Monday.”

From BMW Blog. “Chinese real estate developers are getting creative these days. After years of continuous growth, the real estate market in China has started to show signs of slowing down, so developers are looking for a way to jump start the sales.”

“According to Business Times, Chinese property developers are offering free luxury cars and hefty discounts to lure buyers as lending curbs and funding constraints squeeze their finances. China Merchants Shekou Industrial Zone Holdings Co is giving away a BMW 3 Series or an X1 SUV to buyers of a three-bedroom unit or townhouse at its Shanghai development. The car, or cash equivalent, equates to about a 10 per cent discount on the 3.1 million yuan ($452,000) price of the 89-square-metre apartment (957 sq-ft).”

“At China Evergrande Group’s 646 nationwide projects, a basic 11 per cent price cut widens to as much as 26 per cent once extra perks, such as discounts to buyers referred by Evergrande employees or previous buyers, are thrown in. A further incentive: The developer is accepting an initial down-payment of just 5 per cent, compared with the usual 30 percent deposit required by local governments.”

“Apparently the practice is quite common these days in China, so packages like paid vacations are often seen as well.”

“The world’s largest automobile market is also quite hot these days for housing, but that could be slowing down. To stem the tide, a Chinese developer in Shanghai is actually looking to combine the two genres by offering a free BMW to anyone who buys an apartment or townhome in the company’s swanky building. That sounds like a sweet deal to sign on the dotted line, until you learn the units are approximately $621,000 each.”

“It’s not only the real estate market that is slowing down, the car segment is also showing signs of a pullback.”

This Post Has 19 Comments
  1. ‘a look at the ownership and history of each property does reveal different facets of Vancouver’s overheated real-estate market’

    They have the details on each house in the report. It has crime written all over it. Oh remember the days when anyone who suggested there was crooked stuff going on in BC was called a racist.

  2. ‘The world’s largest automobile market is also quite hot these days for housing, but that could be slowing down. To stem the tide, a Chinese developer in Shanghai is actually looking to combine the two genres by offering a free BMW to anyone who buys an apartment or townhome in the company’s swanky building’

    Cars and airboxes, at the same time? Oh dear…

  3. alternate edit$:

    ” …now fear that price$ and tran$actions of luxury (in$ert your choice $helter) in high-rise block$ will soon take a battering, since (insert your çhoice of favorite cause$) has riven the fancy veneer and laid bare the potential peril of these pricey home$.”

    “riven” … Good Scrabble word.

  4. More older Americans are “unretiring” – CBS News


    “In part, the trend reflects the widespread shortfall in Americans’ retirement savings. A recent Transamerica Center for Retirement Studies report estimates that workers’ median retirement savings is only $71,000, far short of what experts say is needed to retire comfortably. Only 30 percent report accumulating $250,000 or more. Meanwhile, the number of older Americans filing for bankruptcy has surged fivefold since 1991.”

  5. Ben, I like how fast the new site is. But might you sex it up a little? Maybe a cool background, or some contrasting colors. Right now everything is flat white, with small font writing.

  6. Interesting about the effect of high winds and heavy rain on the Chinese condo towers. I’ve also read that (a) winds in a hurricane are stronger the higher you get from the ground, and (b) there is a possible suction effect if you lose your windows, meaning you could be sucked right out of your expensive high-rise apartment.

  7. It seems that I must enter my name and email address on each post. It used to remember that info after one post. Also, I did not see updated posts until I posted. Is the “refresh” working to bring the latest comments forward?

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