China’s Ghost Cities: The Story Behind the Country’s Many Ghost Towns of Abandoned Mansions

China’s ghost cities are far more common than one might think. Take the State Guest Mansions, a development envisioned as the palatial homes for the upper crust of society. Now their only residents are hurdles of cattle and the occasional adventure explorers meandering like ghosts around the arched verandas and stone façades of hundreds of abandoned villas. Located around the hills of Shenyang (about 400 miles northeast of Beijing), the development was originally planned by Greenland Group, a Shanghai-based real estate developer, and broke ground in 2010. But as AFP reports, within two years, the project had come to a grinding halt, leaving the half-formed skeletons of imitative royalty in its wake. Today the crumbling estates are still abandoned, left in an eerie series of rows appearing like an architectural cornfield.

The irony of this formation will only grow more apparent as the seasons begin to turn, as local farmers have begun plowing the land between villas for future crops. Would-be garages of the abandoned mansions are now repurposed as storage for hay bails, and modest two-rail fences corral herds of cows between properties.

The interiors of the abandoned mansions are perhaps even more poignant. A heavy layer of dust and scraps of garbage are the only furnishing in the rooms, a stark contrast to what appears to be marble floors and columns, crystal chandeliers, coffered ceilings, and intricate marquetry. In what would have been the sales center, a model of the completed 260-villa neighborhood still sits. “These (homes) would have sold for millions—but the rich haven’t even bought one of them,” a farmer named Guo told AFP.

A broader real estate crisis

The State Guest Mansions are are just a number of deserted developments scattered around China, an occurrence that speaks to a growing real estate crisis in the country. Nearby is an abandoned high-rise complex, which Jonathan Cheng, a reporter for the the Wall Street Journal, visited in February 2024 and documented in a video on the paper’s website. “This is just another of the residential property developments in Shenyang that have frozen in their tracks,” Cheng says, pointing at a collection of dozens of roughly 15-story buildings. With concrete frames and nonexistent windows, the buildings look like empty oversized Brutalist doll houses waiting for someone to come sprinkle life into their interiors.

But like a toy cast aside long after a child grows up, it’s unlikely that the project will get picked up again. The complex was developed by China Evergrande Group, the country’s biggest residential real estate developer, which filed for bankruptcy in August 2023. This January, a Hong Kong court ordered the company to liquidate, as it was unable to restructure the $300 billion that it owes to investors. According to the Wall Street Journal, about 800,000 of the company’s 1.2 million presold units remain unfinished.

What is causing China’s real estate problem?

China’s ghost cities represent a major problem with the country’s real estate market. For decades, China’s economy was driven by real estate, so much so that the government often encouraged large-scale developments. But an aging population, affordability concerns, and the COVID-19 pandemic, among other factors, resulted in a supply-demand imbalance. Further, the Chinese government has been increasingly cracking down on developers’ reckless borrowing habits.

Evergrande’s collapse is just the most notable example of an occurrence that is happening all across China. Numerous developers are massively in debt, defaulting on payments, and struggling with losses, resulting in these unfinished housing projects and skeletal would-be communities. Greenland Group, the developer responsible for the State Guest Mansion, recently defaulted on $400 million worth of international bonds, Chen reported in the video. These issues have also caused many middle-class Chinese citizens to lose faith in the real estate market, further impacting demand and creating additional risks for the country’s broader economy. As Bloomberg reports, many citizens have grown wealth through real estate, and 70% of family assets are stored in property. “Every 5% decline in home prices will wipe out 19 trillion yuan ($2.7 trillion) in housing wealth,” the publication reported.

Country Garden, another Chinese developer, is responsible for Forest City, a $100 billion mega development in southern Malaysia that is now near empty. Though it was planned to house 700,000 people, only about 9,000 live there, prompting the Wall Street Journal to describe the complex as a “ghost city.” What was supposed to be a place for rich Chinese people to buy a second home or investment property close to Singapore is now another emblem of China’s real estate crisis. According to Al Jazeera, only about 10% of the total project has been completed.

What is the government doing to correct the crisis?

The Chinese government has enacted a number of strategies in an attempt to curb the cascading impacts of the ongoing real estate crisis. In May, policymakers reduced down payment requirements and cut mortgage rates to boost demand among potential homebuyers. Additionally, as reported by Foreign Policy, China’s central bank announced that it would give $42 billion in inexpensive loans to local governments to purchase some of the more than 8 billion square feet of unsold homes across the country and transform them into affordable housing.

“The biggest problem is whether the government purchase program will induce private sector demand,” Raymond Yeung, the chief China economist at ANZ, told Foreign Policy in May. “Clearing inventory will increase cash flow to developers and help their financial stability, but it does not address private sector confidence.”

Recent data suggest that, while these initiatives demonstrate progress in the right direction, there is still much to much ground to cover. As WSJ recently reported, the sector is still in “bad shape” and economists are skeptical if these efforts alone are enough to revive the real estate market. New homes sales were down 36% on a monthly basis and transactions across the country’s 100 top real estate developers dropped 20% last month. Further, potential homebuyers remain hesitant to make purchases given concerns about the economy.

Economists from the global investment bank Nomura said that, though there were signs of progress, this data suggests that the crisis is far from over, and policymakers might need to take even more aggressive steps to correct the economy.

“We still believe Beijing is headed in the right direction to address the housing crisis, as its policy focus has been shifted towards ensuring the delivery of presold homes,” the economists from Nomura said. “However, this is proving to be a daunting task, and we think markets need to be more patient with regard to waiting for more forceful measures.”