Ordos in the northern part of China has all the looks that a prosperous mining center should. With huge reserves of coal and natural gas, the city has been booming with a number of properties coming up every month, and prices are booming. The only problem is, there are no people to inhabit it.
With a population of 1.5 million, the city and its infrastructure is built to take a population nearly ten times that number, with the result that all the buildings appear deserted. Office buildings are empty, the sidewalks lack people and the luxurious residential villas are starting to sprout weeds in their gardens. A result of over-ambitious planning, Ordos was to be the Chinese version of Dubai, converting thousands of acres of the Mongolian desert into a thriving metropolis. The city officials, spurred on by developers, invested over $1 billion in the visionary projects that today lie empty. Even China Daily has derided the city of over 12 square miles as a ghost city.
China’s roaring economy, fueled by the government’s policies during the time when the rest of the world faced recession, has given rise to a booming construction industry that doesn’t seem to know when to stop. Critics have been holding up Ordos as a prime example of a real estate bubble just waiting to burst, sending shock waves through a banking system that is largely state sponsored and which has been the prime driver of growth. Another real estate crisis in the making is how policy observers describe the current boom that is fueled not by buyers but investors hoping to make a quick fortune.
China has recently surprised the world by raising interest rates in a bid to slow down the building bonanza, but analysts doubt this will be any help, with foreign money and domestic investors continuing to add fuel to the volatile fire. Analysts estimate over a dozen such ghost towns across China, created by the government’s drive to move population from the rural belts to the cities in order to create a burgeoning middle class. This has helped fuel property prices and therefore inflation, with many projects priced beyond the means of the people for whom they were meant. For example, in Ordos, housing sales reached $2.4 billion in 2009, up from $100 million in 2004, according to government statistics. During that span, the average square-foot price of commercial and residential property has risen by 260 percent, to $53.
Ordos, which sits atop one of the world’s biggest reserves of coal, whose price has soared along with China’s voracious energy appetite, has a growing number of coal millionaires and the nation’s highest gross domestic product per capita ($19,679) , with Land Rovers a leading symbol of Ordos’s newfound affluence. This is where the optimism of the regions officials stems from, but so far, that optimism is yet to translate to a concrete population growth.