A Chinese Ghost Town Story

The Return of the Ghost Towns

My father, a self-made man of the older school, was convinced that China’s property market was about to collapse. Being perpetually behind the vogue, he has recently watched a series of YouTube videos—which you have probably watched several years ago, like this CNN clip,“ China’s Empty Cities” in 2013. One of the cities featured in this video is Guangsha Sky City (广厦天都城), also known as “Fake Paris.” It is a mighty city development project in Hangzhou by Guangsha Group on a land of 31 km2. It opened in 2007 but failed to attract residents: CNN reported 2,000 vs 10,000 capacity.  

My father’s view is not very different from most of my American friends, who are die-hard “China skeptics.” During his visit to Shanghai, I decided to take him to Hangzhou and to see Sky City for himself—whether it was indeed the “ghost town” as he thought it would be after 12 years. Sky City did not look like a ghost town. Sure, the sunny Sunday afternoon helped, but it was more than that: Chinese families were walking around and eating a leisurely late lunch with their friends; laundry fluttered from every balcony. New developments have sprouted around the original Sky City. The total population has now reached 30,000. One resident claimed that the apartment price was up more than 60% in three years.  

In a way, Sky City was a failed project, in that the founder had failed it. Lou Zhongfu, the founder of Lousha Group, who headed the project with Guangsha Group and Yinghua Industrial, was taken away by the Central Discipline Inspection Commission. Capital dried up as banks were scared to lend. The changes in Hangzhou’s city planning also put Sky City at a disadvantage (however, Hangzhou has eventually decided to extend its subway line (Line 3) to Sky City, and the line is expected to open in 2021). Today, Sky City’s population has grown to over 30,000.  

On the way back to Shanghai, we also visited Thames Town, the so-called “Fake London” located in the western edge of Shanghai. Thames Town was busier with both the locals and the tourists. The project appeared well planned and maintained. While it was odd to see Tudor architecture in the middle of China, there was certainly nothing ghostly about it. 

China’s property markets look mystifying: many huge projects are built, which the naysayers are quick to label as the next ghost towns, but these ghost towns disappear within a few years because people eventually moved in. This “built-then-think” mentality is hard to understand, but it is the reality in China.  

I’m not trying to convince you that China does not have any property bubble. The average property price is far higher than affordable for most people in many large cities. But, the data for smaller cities shows hardly any sign of a bubble. (See our article: Where is China’s Property Bubble in 2017.) 

My father admitted that he was led by those videos on YouTube and recognized the importance of seeing reality instead of the virtual. It may be several years later than expected, but your son has paid back his college tuition to you.