2014-06-19

Shenmu, Shaanxi Credit Bubble Aftermath: Occupancy Rate Zero

Shenmu's credit and housing bubble isn't a new story. Last year, Caixin reported: County in Shaanxi in a Deep Hole as Mining Bubble Pops
The NYTimes covered it as well: Easy Credit Dries Up, Choking Growth in China

Here was a sign that things were going to end badly: Shenmu was building its own Little Bird Nest. The build costs ¥350 million to build and ¥100 million to outfit.

Government compensated farmers at the rate of ¥250,000 per mu, then auctioned land for ¥12,800,000 per mu. One can see why the government finds land sales lucrative......

Everything went bust in 2012 when the private lending bubble burst. Today, it is fashionable to dodge creditors and most people are both plaintiff and defendent in different cases.

The story below is about a housing project dubbed Shenmu New Village. IT started construction in 2006 and is still unfinished to this day......

神木民间借贷崩盘令房价腰斩 豪华新村入住率为0
Shenmu Village on the western slopes of a brick kiln workers sitting on top of the hill embroidered insoles. Shenmu private lending crisis sweeping overwhelmed the local property market has also led to the debt crisis, the tall buildings of Shenmu Village this year, most of the projects have been halted. Southern Reporter Sunjun Bin photo

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Shenmu collapse of private lending rates to make cut

Shenmu Village Cultural Centre cost 350 million yuan, 100 million budget for interior decoration, known locally as "Little Bird's Nest." Southern Reporter Sunjun Bin photo

Business card

Shenmu Village

● Location: Northern Shaanxi Shenmu city about six kilometers

● Area: an area of ​​11.3 square kilometers, with a total construction area of ​​3,000,000 square meters

● Planning Capacity: plans to build 16,000 housing units, which can accommodate thousands of people

● start time: 2006

● Occupancy: Zero

● Reason: coal slump caused by the collapse of private lending market, eventually leading to the construction of stagnation

Wang Xingtian now back to the village, must be that much larger "village", in order to reach the village of Shenmu 红柳林 a group Majiata Township.

Eight years later, the city is located about six kilometers north of Shenmu Shenmu Village, have shown a huge body. Within 11.3 square kilometers in area, 30 more than 100 flats at several dozen buildings along the north-south stretch of several kilometers, with a total construction area of ​​300 square meters, can accommodate the county currently has hundreds of thousands of people.

But when Wang Xingtian Shenmu Village deep into the interior, the front is quite different. Most real estate built around empty, as the entrance with wooden enclosure. Sparse crowd on the road, only see a small amount of cleaning, site care and day laborers in the activities. Some real estate or a reinforced concrete skeleton, is under construction next to the crane. Rely on a real estate in the south, in the middle of the courtyard or sandy soil, thorns and yellow chrysanthemum above profusion.

Shenmu private lending crisis sweeping defeated the property Shenmu Village, also hit the capital for construction. Originally fiery house now nobody cares. "Was not the current house to sell," said the landlord a Shenmu Village. In the housing bubble of the most serious, Shenmu Village second-hand housing price is the original price plus a maximum of 50 million, some real estate speculators who flourishes.

"Generous", "Little Bird's Nest"

This allows 60-year-old Wang Xingtian ghost town puzzled. In Hong Liulin village, Wang Xingtian possessor of his mule and dozens of sheep. Just three miles away, and no buildings erected his life "wonders" on the site.

Under the hot sun, with a total investment of 220 million yuan harmony Square was empty, and the obelisk stands above the pyramid. At night, the square can be filled with 30-meter-high fountain.

Giant steel truss structure Shenmu Village Cultural Center in the sun is very eye-catching. This landmark building known locally as "Little Bird's Nest", with a total construction area of ​​56,000 square meters, cost 350 million yuan, 100 million yuan budget for interior decoration, which will become the most luxurious Shenmu performing arts venues.

Metro started in 2006, aim to create the best living environment of the county town district, plans to build 16,000 units of residential housing. In June 2007, when he was party secretary Guo Baocheng shenmu wrote: "Building Shenmu Village, is the county's first new rural construction of a large project."

August 2003, the National Development and Reform Commission issued four ministries under the "clean up and rectify the existing types of development zones on specific criteria and limits of policy," which requires the following types of development zones on the county level and the government approved the establishment of all revoked. In order to comply with the policy, the new district to avoid the reference to "zone", and use the word "Village." This is reminiscent of the British social reformer Owen founder of the "Harmony Village."

The city plans to build grand encouraged by the superiors. In 2007, when he was deputy director of the Shaanxi Provincial Advisory Committee 李焕政 said decision, the tree can be built in a Village "socialist town." The following year, the construction of provincial leaders praised Shenmu Village is "big, big eyes."

Two competing Village

Village on 1.6 acres Kuye river shoals ground born, but shortly after being challenged another Village.

Shenmu Village party secretary Guo Baocheng too dominant in any building. In 2010, after the mine due west either Shenmu county party secretary, the development focus to Shenmu Village. Shenmu Village, constructed from 2008, is located in the northwest of the city of Shenmu barren sand. Shenmu Village planning area than their larger, up to 15 square kilometers, the project plans to build ceramic industrial park.

"Shenmu Village diversion of investment Shenmu Village, causing the latter was shelved." Shenmu a former government worker said. Village location is also two functions overlap, are planning to "lead enterprise park."

The vast majority of residential real estate Shenmu Village is currently no delivery. "Residential construction project was started in 2009, and by the end of this year with the admission criteria." Shenmu Village CMC Vice 任乔帆 introduction.

Under the private lending crisis, the tree village has become a giant unfinished projects. Ceramic projects originally planned only a space.

Shenmu Village government is building a huge wealth plan. Local Crown, through the construction of Shenmu Village and Shenmu Village, county finance available land revenue from 5000 to 6000 million yuan or more.

Revenue realization spread through the land. Local arable land compensation standard is 250,000 yuan per mu, while the land auction of nearly 12.8 million yuan per mu, the spread to 51-fold.

Built on land revenue on the basis of sharp contradictions. Shenmu Village building needs some land requisition 红柳林 village, including Wang Xingtian including villagers and the government had a huge controversy has not subsided. Hong Liulin Village, a group of villagers 299.78 acres of land was recognized as agricultural land, but the government considered "flood land." Wang Xingtian do this to Beijing to petition, also pulled the "black jail" detained for 16 days. Today, the villagers were told that the land has been expropriated property is land for construction.

Coal Economic stir "targets" when

Shenmu Village building used mainly government departments, as owners, construction company commissioned the development model. Owners of more than estimates, about 80% of Shenmu Village real estate development for various government agencies led. "Part of Shenmu Village real estate development is in accordance with the form to go buy Some units and developers direct contact. Others are in accordance with ordinary commercial housing to go. "Shenmu Village CMC Vice任乔帆said.

Various government agencies to develop real estate, buyers will organize a staff of enrollment. Registration "index" has become a scarce resource. Yang Xiaoming (a pseudonym) is not a government agency personnel, but in Shenmu Village purchased a 148 m2 house. When a unit Shenmu raising towers, the unit he bought from a friend at the "targets" to sign his own name and get a listing, the house worth 530,000. Yang Xiaoming said that such "indicators" can be sold for two or three million.

When Shenmu Village development, it is the golden period of Shenmu coal economy. Coal economy spawned a 2000 billionaires, but also generated a lot of hot money, the main flow of the property market and the private lending market. From 2010 to 2011, the local property market, false prosperity, property prices soared. Some speculators get the numbers, a number can sell a million. A mansion in the middle of a good house, one square meter sold 11,000, significantly higher than the provincial capital of Xi'an, the sale price.

According to a local official had to say, the construction of the original intention was to stabilize the city Shenmu Village rates. However, under the background of soaring property prices, property Shenmu Village of taste. Built in bubble is pulled stir, transfer fees outrageous, the maximum can reach 500,000. Some people with "targets" to get the listing, with a paper contract after the transfer, overnight netted hundreds of thousands. "Real estate certainly, but not a universal phenomenon. County has some room, Village also buy a present, the majority of houses sold, some companies give employees to stay inside part." Shenmu Village CMC vice chairman Joe sail introduction.

Debt crisis downtime

Eight years later, construction Shenmu Village still on the road. Slow or even stagnant due to the construction of coal and the consequent decline in private lending crisis. "Shenmu Village building affected by private lending crisis certainly exists." Shenmu Village CMC Vice 任乔帆 said.

2012 lunar month, a real estate project in Shenmu Village Wang Xingtian start building the grass on the ground, developed by Shenmu Real Estate Development Co., Ltd. Jinzhou. This is a development company Shenmu Village seventy-eight in a. The company Zhi-Ming Wang is controlled by local well-known "coal bosses."

From 2002 to 2012, as the golden years of Shenmu coal economy. 2012, coal prices plummeted. In the peak of the price to sell 600 yuan per ton, and now only sell 300 yuan per ton.

Coal price slump affecting Zhi-Ming Wang. Insider, Ma Zhi-Ming Wang in the coal mines are no longer marketable ditch cover, leading to a lack of funds for construction, site downtime. Today, the site employs eight people to take care of. Seven or eight tower cranes on site, and some makeshift bungalow, a silence.

Private lending crisis erupted, so the loss of investment in the construction of hot money, a lot of contractors into a debt crisis. Shenmu Village in the construction of youth activity center also temporarily shut down. Temporary Xieming Fei said that the above contractors not down wages, workers on temporary lay-up.

Being "cut" prices

In 2010, prices soared, while private lending boom across the sacred trees throughout the city, and even selling barbecue and street cleaners are also involved.

Yang Xiaoming have joined the flood of private lending. From his relatives and friends there to scrape together more than 3,000 yuan, invested in Inner Mongolia, "graphite" ore. The project turned out to be a hoax. After the outbreak of fund-raising fraud in 2013, Yang Xiaoming quilt huge amounts of money, creditors to court him. In desperation, Yang Xiaoming Shenmu Village will house a top account, translated into a 90 million to the creditors. In Shenmu property bubble serious, Yang Xiaoming in Shenmu Village house value 1,200,000.

In 2012, after the collapse of private lending market Shenmu, a lot of hot money "evaporate", a sharp drop in prices. Last year a house worth 2 million in sales this year, less than 1 million.

"Village of the house to the top of the current debt of a few." Owners a Shenmu Village said. Earlier this year, Wang Yu (a pseudonym) Shenmu Village bought a house ready to give his son lived and spent 530,000, a homeowner original transfer. Wang Yu introduced the homeowner money tied up in private lending crisis, eager to cash in debt. If three years ago, buying this house need to spend several hundred thousand dollars.

2013, GDP fell Shenmu billion less. County generally triangular debt, hide debt became fashionable , many people both plaintiff and defendant. In this tragic price, accumulated over decades finally calmed the raging hot money. Close to the sacred trees of financial executives who told reporters the South, the current deposit balance of about 60 billion shenmu major banks, reached a record high.

Just a few people willing to put money into the Shenmu Village. "Last year, Shenmu Village real estate transaction price is the original price plus forty or fifty thousand this year, only one asked, no one will buy, or even lose money no one to buy." A real estate agency official said.

The original plan in 2015, Shenmu Village residents reached 5 million. "How many people come to live in the future, can not say." Shenmu Village CMC Vice Renqiao Fan said.

In 2009, the tree News Online song "sacred trees, I sing for you," the poem wrote: "I walk in Shenmu Village in search of ideas and the rise of the sun Shenmu."

Today, this optimism is being a huge challenge.

Data

Data released by the National Bureau of Statistics show that the first five months of this year, the national real estate development and investment 3.0739 trillion yuan, an increase of 14.7% nominal growth rate down 1.7 percentage points over the first four months, down 1.3 percentage point margin expanded over the previous period. The investment growth rate hit a new low since September 2009's.

From housing sales point of view, the first five months of this year, real estate sales area of 360.7 million square meters, down 7.8%, a decline of 0.9 percentage points over the expansion of the first four months. Commercial sales 2.3674 trillion yuan over the same period, down 8.5%, a decline of 0.7 percentage point over the previous four months. End of May, real estate for sale area of 534.02 million square meters.

According to the China Household Financial Survey and Research Center, Southwest University of Finance report shows that in 2013, the overall vacancy rate of China's urban housing market reached 22.4%, up 1.8 percentage points compared with 2011; As of August 2013, vacant housing occupied 4200000000000 housing loans yuan. At present, China's housing vacancy rate is higher than the U.S., Japan, EU and other countries and regions, towns vacant rooms to 48.98 million units.

The report said China's own home town housing vacancy rate up to 22.4%, socioeconomic serious waste of resources. Among them, the three cities overall housing vacancy rate is slightly higher than a second-tier cities.

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