David Ji: China’s Ghost Cities Are Not A Problem Of Oversupply

A: The commercial market has been quiet for some time, but should be stable going forward. The office market is pretty much driven by supply and demand. In some places such as Shanghai’s Lujiazui, there is still a lack of quality supply.

Q: How about the residential market?

A: It’s slowly recovering. Given the recent turmoil in the stock market, lots of investors believe residential properties are still a safer bet. So we are not too worried about a lack of investment in the residential market. We will still see some growth even if it has been slow at the moment.

My take on the surplus supply or ghost cities is that it is not a problem of the amount of apartments being released into the market. It is a rather a problem of the mis-location of these supplies.

There are a lot of supplies in very remote areas or lower-tier cities where there is no infrastructure or enough demand. Once some infrastructure is put in place, we could see some ghost cities become revived.

About David Ji:
david-jiDavid Ji is the director, head of research and consultancy of Greater China at global property consultancy Knight Frank. He has more than 18 years of research and consultancy experience, having previously worked at Ernst & Young and DTZ, serving various research and advisory leadership roles.

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