[quote=“Icon”]Still begs the question: wouldn’t the buildings lose value when they are left to deteriorate? All buildings deteriorate with time, but empty ones even more, ironically. In a normal marketplace that would happen. Ironically, it is politics what determines the land value.
I can understand the part of the Party selling the land to Party members, them making big profit from selling/reselling. That is not what is happening. Someone has to invest in the building, the money has to come from somewhere. Please don’t tell me its public funds… What I mean to say is that at some point there has to be a return. If you own the land and sell it to a corporation, then make a profit, OK. But if as a Party memeber and CEO of a State corporation, you use such to erect a building, then leave it there? Or sell it to anotehr Party member? Or sell it to a new borgoise? I really don’t see the profit amounting to anywhere close to what all this smokescreen takes in work and time.
I’d also dare to say that owners in Taipei set the rents high actually in order to keep structures free to unload anytime and not to have to deal with improvements -expenses- of keeping up with basic maintenance, building codes, safety and such nuisances. And most importantly, I bet you they are absent landlords, spending most time abroad, either because they inherited this property and they have no attachments to it -as I’ve heard of some valuable plots in Neihu- or just becaus ethey do not live here anymore.[/quote]
Good questions I’d also like to know the answers to. I think you must be right about absentee landlords. They perhaps expect to get all their money back from the resale or are happy to borrow off the current value of their property. I think it is the case that occupancy doesn’t increase value of the land, it is the value of the surrounding land. So, if it is in a busy place where people want to be the value is higher, and if people start bidding for land the value also goes up.
So government agency decides to make x plot of land available to developers. The developers all bid for said land in the hope of being able to recoup the value of the land (at some point in the future) as an asset (land is naturally valuable if someone wants to buy it), to borrow against it, or to sell it on, or a guess a combination of the above.
Maybe the developers really thought people would want to live in these places. Maybe they believe they will in the future. Or maybe like the landlords in Taipei they are just happy to own it.
Regarding the actual building of houses, maybe that is simply a further revenue generator. Maybe the developers get to pass on some of the cost to the building industry, who build on it and sell the properties make money that way? I heard that their is a lot of money to be passed around in this process, regardless if people end up living in these places.