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  • Writer's pictureJoseph Gunerman

Stories of Foreign Real Estate

Even before I got into the real estate business, one of my favorite parts about traveling abroad was looking at how different the real estate is in each country. From simpler and smaller European dwellings loaded with old world character to ultra modern glass high rise condo buildings in Hong Kong, it’s amazing how differently people live in each place. I spent a little over 3.5 years traveling around mainland China and there were several things that really stuck with me as I got so involved in American real estate.

The first thing that stands out was ghost cities and ghost neighborhoods. I don’t mean actual ghosts, I’m talking about HUGE high rise condo complexes and sprawling single family home developments that were completely empty. It seemed like everywhere we traveled there were massive neighborhoods of completed homes, or cities of high rise condos, but there were no people to occupy them. We asked our Chinese colleagues and friends what the backstory was, and they would often tell us that those units are 90+% purchased but that nobody would live in them. Why?

One reason is that owning properties in China is a huge source of tax relief. That means that almost every Chinese billionaire is stocking up on properties not just in China but around the world. A second reason - particularly relevant to the empty condo cities - is that there is a flood of people moving from rural agriculture based towns to cities. They’ve almost built the condo complexes in anticipation of housing need instead of to react to housing need… much different than the inventory shortage we’re currently experiencing around the US. A third reason is that maintaining massive spending on residential construction boosts GDP. The government is building as many residences as possible, and actually paying to keep the lights on in them while they’re unoccupied, which has drawn some criticism that some GDP growth is artificially boosted.

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