Beijing Builds It ... They Don't Come

For locals who are distressed about the queasy state of the US real estate market, be glad we're not in the quandary of Beijing, where the scope of speculative building was unparalleled in the world.

By one account, 500 million square feet of commercial real estate was developed there since 2006 -- more than all the office space in Manhattan. Nearly 20% of this commercial space is vacant, and it would take 14 years to absorb at the brisk pace of leasing from 2004 - 2006.

Real estate development in China is different from that in the West, since there is no private ownership of land. The Chinese government will end up holding the bad debt for properties that cannot be leased.

Nearly all the grand structures of the 2008 Summer Olympics -- including the Bird's Nest main stadium -- have found little use post-games.

Luxury housing developments, where units are priced at $800,000 -- in a country where the average salary is less than $6,000 per year -- are going unsold.

Occupancy in Beijing's hotels -- many of which are newly constructed luxury buildings -- is said to be 10 - 30%. Even during the Olympic games, occupancy is reported to have been only 67% because of Beijing's stringent visa and travel requirements.

And in other news, the International Herald Tribune reports that sales of international second homes are tanking.

It's a small world, after all. And we're all in this mess together.

Jamie Adner