Investing in Chinese Real Estate: A Sign of Water on the Brain!

2006/6/26 19:06:42

I've stated more than once that this ID has bought properties in several major Chinese cities, but has never speculated in real estate — it was solely so that when traveling around, I wouldn't have to stay in hotels all the time, where doing anything remotely noisy is inconvenient. Precisely because of this, when this ID says "Investing in Chinese real estate is a sign of water on the brain!" there is absolutely no conflict of interest — I'm simply stating facts. Otherwise, following the interests of property owners, one would naturally encourage everyone to buy houses. Yet this ID still must say: only those with water on the brain invest in Chinese real estate.

Of course, this ID has bought so many properties without any water on the brain, because that was purely for personal use, not investment. What I'm talking about here is investment. So-called investment requires that the investment comes with some enforceable right. And what rights does Chinese real estate have? As everyone on Earth knows, in China, land is not privately owned. Therefore, fundamentally speaking, Chinese real estate can't really be called "real estate" — because there's no real "estate" (land). There's only the "real" (building), which is nothing but a bubble in the sky. Chinese property owners are merely long-term tenants inside that bubble.

This ID opposes protecting so-called private property. Even from an objective standpoint, without private ownership of land, protecting private property is nothing but empty talk. Tell me: when even the ground you live on is rented, what exactly can you protect? So stop the nonsense about protecting private property. Moreover, historically, the protection of private property has been nothing more than an empty promise that there will be no war or revolution. Once war or revolution comes, those who try to protect their private property can't even protect their own lives — so cut the nonsense.

From a practical standpoint, investing in Chinese real estate is worse than speculating in China's warrant market. Warrants can deliver 10x returns in a month or two. Chinese real estate is essentially just a 70-year warrant — actually worse than a warrant, because at least a warrant might still be worth something at expiration. A property at expiration is worth nothing at all. All this talk about paying supplementary land fees at that point is just nonsense — nonsense concocted by developers. Chinese developers are, in a sense, like market makers who create warrants — only fools would take them seriously.

Of course, even with water on the brain, as long as there are people with even more water on the brain, there are speculative opportunities. If you want to invest in Chinese real estate, become a developer — then find small property owners with even more water on the brain to buy the properties from you, just like warrant-creating market makers selling warrants to retail investors. There's no shortage of water-brained people in this world, so this game will always be playable. Give your head a good shake — if the sloshing sound is loud enough, feel free to participate.