One of the storylines before and during the Olympics was the architectural wonders sprouting out throughout the city. On nearly every other block, there was a construction project or billboards advertising a future project. But no one ever asked the question, Who’s going to rent/buy/fill all that space? Nearly six months after the Games, we have an answer: No one.
From the LA Times:
Beijing went through a building boom before the 2008 Summer Olympics that filled a staid communist capital with angular architectural feats that grace the covers of glossy design magazines.
Now, six months after the Games ended, the city continues to dazzle by night, with neon and floodlights dancing across the skyline. By day, though, it is obvious that many are “see-through” buildings, to use the term coined during the Texas real estate bust of the 1980s.
The Bird’s Nest, the linchpin of the Games, is empty — even though it costs $9 million a year to maintain. The mammoth concrete Olympic plaza is empty. High-end apartments and homes are empty because no one can afford them. As the article states, at some point the banks that financed all the projects will have to “pay the piper.” And when that time comes, how will that affect China’s investments abroad? More specifically, China’s investments in the U.S.?
As Hillary Clinton said during her trip to China, the U.S. still needs China’s investements. Although I am no economist or financial guru, it’s not hard to envision a precipitous fall in China’s markets this year or next. And I wonder if China can still keep financing American debt if that happens. Perhaps we’ll find out once the piper comes out to collect.