(no subject)

[randomness]

I like cool new architecture as much as anyone. However, stories like this make me think "commercial real estate bubble":

The 121-story Shanghai Tower is more than China's next record-setting building: It's an economic lifeline for the elite club of skyscraper builders.

Financial gloom has derailed plans for new towers in Chicago, Moscow, Dubai and other cities. But in China, work on the 2,074-foot (632-meter) Shanghai Tower, due to be completed in 2014, and dozens of other tall buildings is rushing ahead, powered by a buoyant economy and providing a steady stream of work to architects and engineers.

China's edifice complex is driven by a mix of demand for space in a crowded country with economic growth forecast at 10 percent this year and local leaders who want architectural eye candy to promote their cities as commercial centers.

Dozens of midsize Chinese cities are building new business districts to replace cramped downtowns. They look to the model of Shanghai's skyscraper-packed Pudong district — China's Wall Street — created in the 1990s on reclaimed industrial land.

"Governments are encouraging these iconic buildings in order to give a very clear message to the outside world: Please pay attention to our city," said Dennis Poon, managing principal of Thornton Tomasetti, the Shanghai Tower's structural engineers.

(emphasis mine)

Well, then! What could go wrong with that plan?

Comments

[doctordidj.livejournal.com]

Reminds me of that gargantuan pyramid hotel in Pyongyang. 105 floors, five revolving restaurants, 3700 rooms ... is what they planned. What they have is the visibly rotting carcass of an enormous building that never functioned.

[r-ness.livejournal.com]

Well, it certainly attracts attention! :)

[bedfull-o-books.livejournal.com]

Nope. Nothing could possibly go wrong with that....

[contrariety.livejournal.com]

Nothing says, "My city is an up-and-coming metropolis!" like a vanity building with no tenants! :)

I tend to lean toward the "government interference, yay!" part of the political economic spectrum. Still, there's cyclicality in all things, and it does seem like government interference in markets right near the end of bubbles tends mainly to be designed to try to prop the bubbles up a bit longer, which of course is just going to intensify the resulting problem once the bubble bursts. We should come up with more productive things to do!

[achinhibitor.livejournal.com]

Is there any way to short this?

[r-ness.livejournal.com]

Didn't I answer this one before? :)

Anyway, I'd look at everything in the supply chain, from the architectural and engineering firms right down to the commodity suppliers. Just ask yourself the question: if this bubble burst, and the Chinese stopped being the worlds' foremost builders...who would lose business?

Then short that.

A friendly warning, however: timing is everything. And there's really no telling how long the Chinese government will continue to try keeping all this propped up...

[r-ness.livejournal.com]

Nothing says, "My city is an up-and-coming metropolis!" like a vanity building with no tenants! :)

You should seen an entire neighborhood of buildings without tenants. I rode the metro through the Binhai New Area in Tianjin in the spring. The whole area was full of empty high-rise buildings.

Now, to be fair, it's possible that they're simply not rented yet. For one thing, the metro stop isn't yet built. Nor is the university planned for the neighborhood open yet. So it may soon be full of people. They hope.

China has been doing this "build it and they will come" style of development for some time now. Back in the '90s I found myself at the eastern railway station in Guangzhou, in the Tianhe district of the city. At the time it was pretty empty; a sports complex and some low, widely spaced buildings were all that were there. Now it's high-rises, all of which went up in the last decade or so. I didn't recognize the place. (This is not an exceptional experience on returning to China after an absence of a few years.)

So it's true that it's worked so far. But as you say, there's cyclicality in things, and it may be that there's a limit to this. Where that limit is, exactly, is a very good question. On that question bursts the bubble...

hutongs

[doctordidj.livejournal.com]

I loved staying in the hutongs of Beijing, when I was there, in 2000. Mazes of little alleys, full of local street life, rich with history. At that time they'd already bulldozed many neighborhoods to make way for generic high rise boxes. I hope they've managed to keep at least some of the hutongs.

Re: hutongs

[r-ness.livejournal.com]

Some of them are still there, although nowhere near as many as there used to be, and some have been tarted up into Disneyfied showcases of themselves.

I got to visit a family living in a traditional house in one of the hutongs the first time I went to Beijing, and I got to stay in a hostel along one this time. They're definitely something to visit before they disappear.