China Property Developer Faces Collapse, Increased 'Ghost Cites' Likely

  • China Ghost City
    Residential homes line a deserted street in the Kangbashi district of the town of Ordos in China's Inner Mongolia Autonomous Region May 11, 2011. About 30 km (19 miles) north of Dongsheng is the Kangbashi district of Ordos, which means "palaces" in the Mongolian language, an area filled with thousands of residential apartments and duplex-style homes, built to house mainly workers for the nearby coal mines just outside the town. However, the estimated one million people that were expected to move into or visit the district's now decaying buildings, have yet to appear. Reuters
  • China Ghost City
    Residential homes line a deserted street in the Kangbashi district of the town of Ordos in China's Inner Mongolia Autonomous Region May 11, 2011 Reuters
  • China Ghost City
    Residential homes line a deserted street in the Kangbashi district of the town of Ordos in China's Inner Mongolia Autonomous Region May 11, 2011. Reuters
  • China Ghost City
    Newly planted trees line a new street in front of residential buildings under construction in the Kangbashi district of the town of Ordos, located around 30 kilometres south of the city of Dongsheng in China's Inner Mongolia Autonomous Region May 11, 2011. Reuters
  • China Ghost City
    Boarded entrance gates are seen at the front of abandoned buildings that were to be part of an amusement park called 'Wonderland', on the outskirts of Beijing December 5, 2011. Construction work at the park, which was promoted by developers as 'the largest amusement park in Asia', stopped around 1998 after funds were withdrawn due to disagreements over property prices with the local government and farmers. With local governments often dependent on land sales to fund payments on a staggering 10.7 trillion yuan ($1.7 trillion) of debt, Beijing worries that a collapsing property market will trigger a wave of defaults that in turn will hit the banks. Reuters
  • China Ghost City
    A farmer carrying a rake walks down a dirt road past a replica of the Eiffel Tower at the Tianducheng development in Hangzhou, Zhejiang Province August 1, 2013. Tianducheng, developed by Zhejiang Guangsha Co. Ltd., started construction in 2007 and was known as a knockoff of Paris with a scaled replica of the Eiffel Tower standing at 108 metres (354 ft) and Parisian houses. Although designed to accommodate at least 10 thousand people, Tianducheng remains sparsely populated and is now considered as a "ghost town", according to local media. Reuters
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China is about to be littered with even more “ghost cities” as one of the nation’s biggest land developers faces collapse. One of China’s largest developers, Zhejiang Xingrun Real Estate Co., also has one of the largest debts to repay.

According to various reports, Xingrun has more than 3.5 billion yuan, around $570 million, in debt, and will leave several partially completed projects across the country empty, adding to the nation’s eerie collection of “ghost cities.”

Ghost cities are the result of prematurely built and underfunded urbanization projects that lose backing midway through completion. Because of China’s breakneck economic growth, projects were started all over the nation and they are are now being affected by China’s intentionally slowing economy and cooling real estate market.

As China’s real estate market remains healthy in top-tier cities like Beijing and Shanghai, the collapse has hit many of the nation’s tier 3 and 4 cities and other areas that have prematurely pushed for urbanization. Permanent reminders are seen in various half-built extravagant structures and abandoned large scale projects in some of the most rural areas.

The collapse of this particular company will result in ghost cities reaching the city of Ordos, located in China’s northern Inner Mongolia province. 

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