April 22, 2014

The Reality Behind Bikini-Clad Models

The South China Morning Post reports on Hong Kong. “Home sales in the secondary market registered strong growth during the Easter holiday as more owners joined the price-cutting strategy employed by developers to spark buying interest. ‘It was driven by more owners willing to offer discounts after developers’ aggressive market launches at competitive prices to entice buyers,’ said Sammy Po Siu-ming, chief executive of the residential department at Midland.”

“The agency said a three-bedroom, 702-square-foot unit at Yuan Kung Mansion in Taikoo Shing changed hands for HK$8.75 million, below the asking price of HK$8.9 million.”

The International Business Times on China. “Every month, the agents at a small real estate office in Ningbo, China — a booming coastal city south of Shanghai — gather to discuss their so-called ‘trouble projects,’ meaning developments needing an extra push to fill vacancies. In the southwestern city of Kunming, some developers now advertise ‘buy one floor, get two floors free’ deals at an apartment complex called Helen International. The apartments are located in the Chenggong area of the city, known for being one of China’s many grossly overbuilt ‘ghost cities.’”

“In the northern Chinese city of Dongying, in Shandong province, one developer has been employing bikini-clad foreign models, a rarity in China, to lure buyers. The scantily dressed women sat atop shiny luxury cars parked in front of big promotional billboards showing projected images of what the development would eventually look like — an impressive space, complete with pristine pools, and other state-of-the-art facilities. The reality behind the models was less enthralling: two towering half-finished concrete skeletons.”

The Sydney Morning Herald. “China’s new-home price increases eased across the country last month amid tighter credit that led to developer discounts. Developers including Agile Property Holdings and Wharf Holdings cut prices in some eastern cities this year as market sentiment weakened on tight liquidity. China’s broadest measure of new credit fell 19 per cent in March from a year earlier and money supply grew at the slowest pace on record, central bank data showed.”

“‘Mortgage availability is really constrained,’ Michael Klibaner, greater China research head at Jones Lang LaSalle said. ”Right now, the buyers are still willing, they’re just constrained because they can’t get the debt. If sentiments start deteriorating, that’s a much bigger problem.’”

From Bloomberg. “In front of construction-site billboards depicting Tiffany and Louis Vuitton shops, Liu Cuiying squats on the bank of the Han river, washing orange bedsheets. Liu lives in a run-down house in the village of Luying on the outskirts of the city of Laohekou in central China. She says her land was bought by the local government as part of a plan to expand the city to more than twice its size, but she hasn’t been relocated to a new home. In other villages nearby, farmers say the government promised to buy their houses and then didn’t have the money to pay.”

“They are caught between a local government that wants to extend China’s three-decade investment spree and President Xi Jinping’s determination to rein in lending and real-estate development that caused debt to soar. ‘What do I have? I have nothing!’ she says repeatedly as she beats the sheets on the bank with a wooden bat. ‘My land is gone. What are we going to do?’”

From NTD TV. “Chinese writer Gordon Chang commented that the world’s largest retailer Walmart will close it’s Zhaohui store in Hangzhou on April 23. This is part of Walmart’s plan to cut unprofitable stores. At the end of last year, due to excessive construction, the average occupancy rate for A class office buildings in Hangzhou was only 30%. Residential prices fell because of weak occupancy rates.”

“Mr Li, Shanghai real estate agent: ‘The second hand housing prices can be discussed with a little loose house price. This is not like 13 years ago, where the landlord offered the fixed price. Last year, housing prices were actually falling without inflation if it is not increasing. The price should fall in three-wire or four-tier cities.’”

“Mr Wu, Foshan City Realtor: ‘Basically the prices are falling. More speculation and more people borrowing money make the prices deviate from market prices, and to produce bubbles. Every year’s increasing tax is earned by the government, and the government simply do business without capital. China’s economy is now supported by real estate, so if the real estate collapses, then the economy will collapse also.’”

The New York Times. “In thousands of pages of corporate documents describing these ventures, the name that never appears is his own: Zhou Yongkang, the formidable Chinese Communist Party leader who served as China’s top security official and the de facto boss of its oil industry. But President Xi Jinping has targeted Zhou in an extraordinary corruption inquiry, a first for a Chinese party leader of Zhou’s rank, and put his family’s extensive business interests in the cross hairs.”

“The case has the potential to alter the political compact of China’s boom years. For many elite clans, like Zhou’s, acquiring stakes in lucrative enterprises that did business in the realm that the family patriarch supervised was not effectively banned—and sometimes not even well disguised. Zhan Minli lives in an Orange County, Calif., retirement community. Short and silver haired, she opened the door to her house after reading written questions passed under her door about the companies she owned in China.”

“Zhan said the holdings in her name were actually controlled by Zhou Yongkang’s son, Zhou Bin, who is married to her daughter, Huang Wan. She said it was customary in China to put assets in the name of one’s parents, and suggested that her son-in-law used her name because his own mother had died in a traffic accident. Zhan said she and her husband were longtime US passport holders despite Chinese documents that said they had retained Chinese citizenship.”

“Property records show they have lived in the US for nearly three decades, moving from Maryland to New Jersey and finally to Southern California, where their house has an estimated value of more than $700,000, according to the online real estate database Zillow. Zhan’s home in Beijing looks to have been much more expensive. In 2010, a company document listed her residence in a luxury development in northeastern Beijing where units can sell for more than $11 million.”

“Her official business address was listed several miles away inside a dusty compound at the end of a dirt road. The building appears long abandoned, but for the red light on a surveillance camera peering from above the front entrance and the ferocious barking of a dog. Several firms in deals with CNPC are registered at the address under Zhan’s name and that of a business partner, identified by the Chinese business magazine Caixin as a college friend of and proxy for Zhou’s son.”.

“The companies have invested in gas projects on Hainan Island and in Hebei province outside Beijing as well as in a housing development outside the capital. Zhan denied any wrongdoing or having much knowledge of these investments. ‘I’ve never seen the oil field we owned,’ she said. ‘I don’t know how money laundering works.’”

Bits Bucket for April 22, 2014

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