Cup of Cha
This is China

My lease is up in a few weeks, and while I’m happy with the current apartment, I’m willing to test the waters. I’ve been looking at some places recently and have come to an unmistakable conclusion: Beijingers have lost their effing minds. They seem to think that owning a Beijing apartment in 2008 is as lucky as being Jeb Bush this year–except the complete opposite. Apparently word has not spread that the Games last for exactly two weeks, while leases are a year or more.

I’ve seen apartments in my current building (the same building!!) where people are asking 50% more than what I’m paying now (my own landlord is asking a modest 8% bump). When I ask them how they possibly think they can justify such a bold increase, the standard answer has been “the Olympics are coming.” Since I know some of these apartments have been on the market a month or more, I’ve been more than a little tempting to ask how that how Olympics-logic has been working out for them.

The Olympics Logic seems to be pervasive across different areas. People seem to think the property market in Beijing is going to continue to boom indefinitely, and that China will somehow make a net profit on the Games when they are building expensive stadiums that will go unused in the future. Just take a look at how it worked out for Athens. This is from a Time article three years ago:

The Olympic flame was extinguished at the 2004 Summer Games in Athens 10 months ago, ending a carnival in the Greek capital that had lasted 16 days. Now there’s just the hangover, and the bill to pay…

The government spent $3 billion building and upgrading 36 venues for the Games and another $8 billion on infrastructure and security. Organizers dished out $2.4 billion on operations and in May said they had turned a $9.2 million profit. All told, spending on the Athens Games exceeded the gdps of more than 100 nations, including Jamaica and Malta.

Thanks to its profligacy, Greece now has a 6% budget deficit, in breach of the European Union’s stability pact, and its economic growth is projected to slow from 4.2% in 2004 to 2.8% in 2005. “The fact that Greece is in breach of the stability pact is in large part due to Olympic accounts,” says Christos Hadjiemmanuil, who is on leave from the London School of Economics to run the state company that is trying to lease out Olympic properties such as the sailing center.

It can be tough to quantify how much money has been spent specifically for the Games because projects like the CCTV Building, which almost certainly not have been built had Beijing’s bid not been successful, typically are not counted. That project alone is now estimated to cost more than a billion dollars. Suffice to say the Chinese are spending more than the Greeks did. (Current official estimates have been about US$40 billion, but excuse me if I’m skeptical.)

This lunacy of the Olympics Theory clearly indicates to me that a bubble may be growing in more than one sector as a result of Beijing gearing up for the Games. People seem to more than slightly overestimate the value of the Olympics here. From where I am sitting as I write I can see nine cranes frantically building housing and one shopping center–none of which will be finished by the Games. This doesn’t even include the aforementioned CCTV, which is straight ahead of me, and will inevitably topple by August. (Nothing supports a city block worth of structure 40 floors in the air. To paraphrase The Dubya, I might just be a simple blogger, but I see potential problems here.)

Is anyone in Beijing even aware that countries tend to have dramatic economic declines in the year following hosting the Olympics? What is the city going to look like with a housing market flooded with shiny new, if shoddily-made, apartment complexes if Beijingers are no longer renting multiples in the hope that they can cash in during the Games? If you’re interested in a perspective on this, the Beijing Economic Review has an interesting article both citing the statistics to which I refer, as well as making the case that Beijing is not necessarily analogous.

Regardless of what they say, I’ve come to the unmistakable conclusion that people have lost their damn minds. I asked one landlord if he knew that the Olympics only last two weeks, and he assured me that they were in fact two months. And the sad thing is, I’m pretty sure he believed that. It’s almost like the seven years of build-up have been so much that people think to themselves, “Hmmm…14 days must be wrong. I mean, who would demolish a whole city for two weeks of bad press and 10,000 journalists trying to find out where fortune cookies are made?”

I have a message for all those other people out there that think August 8, 2008 is the end point. It’s only the beginning, and what you do after August 23 is a whole more important than what you’ve done up until now.

Tags: property
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