Accounting & Investing Info for San Antonio A & M
Monday March 3 2013
It looks like our prediction of stock market tops is gathering steam. After a Sixty Minutes Report on the Chinese Real Estate Bubble, the Shanghai dropped 3.7% with the Property Index down 10%. Stories of entire ghost cities, built to keep employment up while hoping for a recovery are apparently now front and center.
Gold is up six bucks on the news.
I watched that report and it is crazy that no one lives in all thoses apartments. If Chinese investors have learned anything from the US about investing in Real Estate, they better tread those waters cautiously!
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I did not see this report but China has been an interest of mine almost 20 years running. During my 1st semester at Texas A&M-San Antonio (Fall 2011) I mentioned the ghost cities briefly in a report I wrote about Chinese manufacturing interests. If you further research their ghost cities, you will be surprised to discover how many there actually are, some reported to be covered up by the government. There are entire cities where most people have left, cities built but no one came, and cities built for miscalculated future growth. Check out China’s South Mall, the largest in the world ( based on leasable space) and how it has remained 99% empty from its very opening. Dig deeper and you will also discover about empty plants and many business centers.
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“If you build it, they will come” is BS, and that is where realestate is about 100 years in the past. If you want a new city it is very difficult no matter the country. 1: have direct access to major sources of transportation (land, sea, air) at least two of these must exist (you can survive without air or sea but not both). Then the resources have to be right, no tech company is going to move without a major tech base in existance (ie specialized facilities, resources, and cables millions of miles of cables). People assume Detroit is shrinking because of crime, jobs and so forth the truth is Detroit is shrinking because people don’t have the modern resources availible to make it a viable city at the right price (tax’s). Fix the resource and fix the tax issue and Detroit will thrive again however Detroit is to far into the hole to pump the needed cash into these projects. Same in China build a shiny new building but don’t have rail and major highway access and who would go there.
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At least two of these must exist (you can survive without air or sea but not both). Then the resources have to be right, no tech company is going to move..
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Professor Elam 
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