Sunday, 8 March 2009

Beijing's Olympic building boom becomes a bust

Very interesting Los Angeles Times article about Beijing's massive over-supply of office and luxury residential real estate.

  • It is said that China has invested $43 billion on Beijing Olympic infrastructure (3 times larger than other Olympic cities).
  • From 2006 and 2008, 500 million sqf of office space has been build (equivalent of total office space in entire Manhattan). This number exclude government-led projects.
  • There are still 100 million sqf of vacant office space --- it takes 14 years to absorb this vacancy.
  • The National Stadium, known as the Bird's Nest, has only one event scheduled for this year: a performance of the opera "Turandot" on Aug. 8, the one-year anniversary of the Olympic opening ceremony. China's leading soccer club backed out of a deal to play there, saying it would be an embarrassment to use a 91,000-seat stadium for games that ordinarily attract only 10,000 spectators.
  • The supply of residential real estate is skewed toward luxury properties, out of reach for "regular people" and they are expected to drop 15-20%.
As China's economy is drastically slowing down, it make office vacancy and price drop much worse.

It make me realize that world was so "bubbly", especially in emerging countries and emerging cities to name a few such as Dubai, Macau, Beijing, Moscow, etc...... And history of bubble certainly repeat by itself.

Happy Investing!!!!!

1 comment: