Out-of-Funds Chinese Property Developer Oceanwide Tries to Shed its Mega-Money-Pits in San Francisco, Los Angeles, and Manhattan at a Loss, But it’s Hard

At first, capital controls cut off funding. Now the coronavirus gets in the way of the money-losing sale it could finally line up.

By Wolf Richter for WOLF STREET.

The twisted saga of Chinese money in US commercial real estate takes on another twist; this time the coronavirus is blamed.

Back in October, after months of rumors about funding problems, property developer Oceanwide, a division of Chinese conglomerate Oceanwide Holdings Co. Ltd., admitted that it had halted construction indefinitely on a 54-story 605-foot tower in San Francisco’s Transbay district. This is the shorter of two towers in the same project. Two years behind schedule and way over budget, it may no longer be commercially viable.

At the time, the company said that construction of the other tower, at 910-feet the second tallest in San Francisco, would continue. The project – the largest currently under construction in the City, with 1 million square feet in office space, a 169-room Waldorf Astoria, and 265 condos – was already two years behind schedule. At the time, Oceanwide said it was looking for an investor.

Then on January 23 this year, Oceanwide disclosed in a regulatory filing with the Shenzhen stock exchange, reported by the San Francisco Chronicle, that it had made a deal to sell the unfinished project to SPF Capital International, an affiliate of Beijing-based SPF Group, for $1 billion. But the sale came at a price: Oceanwide disclosed in the filing, according to The Real Deal, that it would take a loss of $276 million on the $1 billion sale.

San Francisco’s Oceanwide Center was the second mega-project by Oceanwide in California where, after Oceanwide ran out of money, construction was halted.

The first one was Oceanwide Plaza in Los Angeles, an even larger three-tower project of with over 500 condos, a 184-room luxury Park Hyatt, and another desperately needed 166,000 square-foot, you guessed it, brick-and-mortar mall. In January last year, Oceanwide abruptly halted construction. The unfinished and way-behind-schedule project, which is mired in scandals and tangled up in an FBI corruption investigation, is now apparently for sale.

Oceanwide also has a project in lower Manhattan, at 80 South Street, a planned condo tower as high as 1,436 feet. Work hasn’t even started yet. Oceanwide acquired the site from the Howard Hughes Corp. in 2016 during the heyday of Chinese money in US commercial real estate, for $390 million. Last June, Oceanwide put it up for sale, with pricing talk at around $300 million. If it can get this price, it would mean another big loss. But no sale has been announced yet.

And Oceanwide’s current major project in China is in the Central Business District of Wuhan….

Alas, the $1 billion sale of Oceanwide’s San Francisco project, on which Oceanwide would lose $276 million, has now run into trouble – and this time, the coronavirus got blamed.

Oceanwide disclosed in a filing with the Shenzhen Stock Exchange, reported by The Real Deal, that it and the buyer, SPF Capital, have agreed to delay the deal by about a month due to issues related to the coronavirus lockdowns in China. The deadline for due diligence would be pushed from February 19 to March 25, and the delivery deadline would be pushed from March 5 to March 31.

Oceanwide just can’t catch a break. At first, China’s capital controls and crackdown on fund-flows to foreign real estate projects made funding of its US projects impossible. And these projects ran out of money. But selling these unfinished far-behind-schedule and over-budget projects – San Francisco’s Oceanwide Center may require another $1 billion – is tough. And now the coronavirus is not only getting in the way of its Wuhan project, but also tangling up the sale of its San Francisco project.

The real fear in San Francisco and in Los Angeles has been for a while now that these mega-money-pits will remain unfinished lifeless construction eyesores in prime spots in the center for years to come.

The charts are brutal. Read…  China’s Non-Manufacturing & Manufacturing PMIs Show to What Unfathomable Extent the Economy Has Collapsed

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  101 comments for “Out-of-Funds Chinese Property Developer Oceanwide Tries to Shed its Mega-Money-Pits in San Francisco, Los Angeles, and Manhattan at a Loss, But it’s Hard

  1. qt says:

    Worse the the Japanese in the late 80s.

    • I’d love to hear more on that comparison.

      • joe saba says:

        sign of times
        didn’t clint pickup nice golf course after crash

      • ALWAYS TANKIE says:

        Same – would love Wolf to do a post comparing the current state to the lost decade of Japan, and how Marx was right.

    • Trinacria says:

      And so it begins…I have always believed that China would follow the same path as Japan sooner or later. Heck, we are all following the same path as Japan to one degree or another. Is this “end stage FIAT disease” ?

    • A says:

      Agreed.

      China’s slamming into the middle income trap as their rising wages mean they don’t want to do menial factory jobs anymore. But they don’t have the university system or creative culture to invent, build complex export products like airplanes, or develop world-class software.

      The rich, knowing this, looted the country and used the funds to buy property worldwide. I think one of the primary causes of housing bubble 2.0 is the unimaginable sum of wealth sloshing into global property from Chinese who sold their businesses at the top and needed someplace to put the $$$.

      • JoAnn Leichliter says:

        I wonder what effect this will have in Canada, parts of which have virtually sold themselved to China (jacking up housing prices and causing a shortage, I hear).

      • Harrold says:

        “build complex export products like airplanes”

        Very similar to the US, don’t you think?

        It is indeed interesting that it seems only the socialist countries of Europe can build quality aircraft now a days.

        • California Bob says:

          re: “It is indeed interesting that it seems only the socialist countries of Europe can build quality aircraft now a days.”

          Actually, no. For the record, early Airbus aircraft had a nasty habit of flying themselves into the ground (Airbus engineers think they can fly better than pilots). Some of the losses can be attributed partly to pilot error, often due to confusion over who was flying the plane and who wasn’t (pilot vs software). Air France Flight 447 was the most recent example, due partly to Airbus putting pitot tubes that were prone to icing-up on their planes.

          https://en.wikipedia.org/wiki/List_of_accidents_and_incidents_involving_the_Airbus_A320_family

        • robt says:

          France, Germany, Spain, UK, Russia, Turkey, Finland, Poland, and Romania where Airbus operates are not socialist countries.
          Actually there are no socialist countries in Europe. Any of the crypto-socialist governments abandoned any socialist aspirations a long time ago.

      • Jack3 says:

        A, “…they don’t have the university system or creative culture to invent, build complex export products like airplanes, or develop world-class software.” That’s what their technology transfer program was all about during the ’80s. They’ve been doing that ever since. I actually heard Pres. Trump mention that phrase (technology transfer) during his tariff tweets last year and before. How good that turned out to be, I don’t know but maybe Covid-19 is a bad (or good) example, depending on your point of view.

      • John Taylor says:

        We can’t blame the Chinese entirely, when the current so-called capitalist mantra is “Central Banks of the World Unite!”

        The financialization of the economy and of housing, followed by endless QE. What could go wrong?

  2. Dear God! Coronavirus can time travel! Wrecking deals before it even existed! Insidious!

    • Thomas Roberts says:

      The coronavirus is a very powerful and mysterious beast.

    • MC01 says:

      Breaking news: researchers suspect Covid-19 to be a mutation of the insidious Brexit or even of the highly lethal Trade Wars.
      Citizens are advised to stay indoors and buy Tesla stocks, just in case.

      It was at first believed a cure of deeply negative interest rates could cure the disease, but experience in Italy hints this not to be enough and may be supplemented by big tax breaks and massive incentive injections.

      Warning: if you see a person that shows Covid-19 symptoms do not try to cure him by throwing money at him. Wear a mask and gloves, keep a safe distance and tell him to take a loan to buy real estate, a big SUV or Netflix stocks.
      Failure to follow these procedures may result in terrible things, such as c-suites not getting a big enough bonus for Chritstmas.

      • George says:

        Brilliant !

        • Off The Street says:

          And a short sale or liquidation purchase opportunity once some decent interval has passed. Just don’t forget to budget those clean-up expenses.

      • timbers says:

        The Fed should set up a hotline for people who are sick…because we know the reason for emergency rate cuts is to cure the flu, because the Fed said the economy is strong. So it’s not for the strong economy, but the flu.

        Rich people who are sick can use the hotline to tell the Fed what is wrong, so the Fed can cure them with more emergency rate cuts.

        But if BS wins, we might have to change that from rich people, to just people.

        So our leaders need to figure out a way that doesn’t happen.

        • MC01 says:

          Doctor Timbers, I have a serious (financial) health problem: I underwent rate cut surgery several times over the past decade, to the point I am now in deeply negative territory. Yet I am not younger, more handsome, smarter, stronger and faster and women don’t fall at my feet like my last doctor promised me.
          I fear he may have suggested me the wrong remedy and when I look at the securities my banks offer me I have the feeling he may not have paid much attention while in medical school (of economics).

          I went to see another physician and this one suggested a radical cure of even more aggressive rate cuts together with huge tax breaks (fine print said they may cause massive deficits and loss of budget control), large subsidies and a new drug called “eurobonds”. Apparently this new miracle drug has been in development for about a decade now and despite failing every single (fiscal and financial) clinical trial it has been put through it’s now ready to enter the market.
          I am usually all for brand new miracle drugs but I cannot shake off the feeling this one won’t make me more attractive, smarter stronger etc because it seems nothing more than the old cure with a brand new coat of paint and an expensive new drug thrown on top.

          What are your recommendations?

        • timbers says:

          Doctor timbers is out of advice.

          But the internets aren’t.

          The internets say the Fed needs to cut another .50%.

          The internets are smart. They know how to make the Fed do want the want.

        • MCH says:

          The internet really want NIRP. Forget 50 basis points, that’s for losers… kind of like treasury and bonds are like for old foggies. Only 50 basis point more means that you’re not cool enough to buy Tesla stock or smart enough to use Robinhood. Stop it with the E-trades and Schwabs, and Fidelities. Only users use those types.

          NIRP is the way to go…. it is the new NERD. Totally cool.

      • R Hughes says:

        Humor is always appreciated when it is well written.

      • Zantetsu says:

        Ha ha MC01 that is legit funny!

      • California Bob says:

        “… may be supplemented by big tax breaks, FOR LARGE MULTINATIONAL CORPORATIONS AND BILLIONAIRES ONLY, and massive incentive injections. ”

        FIFY.

      • Mark_2 says:

        Yea, that was good!

    • robt says:

      It’s even more deadly than Y2K, SARS, or any other blame-du-jour.

  3. WES says:

    Clearly kitchen sink time!

  4. Erik Levy says:

    Gaw Capital is next. Look into them. They own The Columbia Center in Seattle. They spent a fortune to buy the building then remodel it then jack everyone’s rent up.

  5. Iamafan says:

    Any pictures of the eyesores?

    • Wolf Richter says:

      Here is the LA site:

      • VintageVNvet says:

        Thanks Wolf,,, reminds me of a couple of times in SW FL: Most recent was 2006 when a clerk at a convenience store chatted that he had just ”flipped” a condo a couple blocks away on the Manatee river for half again what he paid the day before; a couple months later those same condos were selling SO cheap that most of the former buyers just let their old contract go and bought another for less than half, there were several high rises, and one got finished and the others not for several years, though not ever to the same height as planned.
        The other was the original Ringling hotel on the south end of Longboat Key, that sat as a naked structure for 3 or 4 decades after the late 1920s, with kids falling to death down the empty elevator shafts, etc. Not sure when it was eventually demolished as I had moved on by then,,, Probably when ARVIDA bought a lot of the old Ringling properties, including Bird Key, etc.
        As others have said on your very educational site, it appears to be ”deja vu all over again,” but I for one hope it will not last as long as the final effects of the great depression, or whatever we call it these days.

      • Clete says:

        Okay, hear me out. This looks like a case for eminent domain: L.A. County buys the bones at .10 on the dollar, sells the cranes, and provides free al fresco housing for all the people currently camped outside city hall. It has to be better than being on the street, right?

      • The artist formerly know as Marcus says:

        Is this an up to date photo? Cranes are often rented which makes me wonder who has been sitting on four idle rigs. It’s like the outhouses… if you want to know when a construction company is strapped for cash, watch for disappearing port-a-johns. Those things are loaded up at the first bounced check.

    • c1ue says:

      SF oceanwide is literally 2 holes in the ground.
      And it isn’t across from Millennium, it is catty corner across 1st street from the Sales Force Tower – a large lot touching both Mission and 1st streets behind several small buildings clustered at the corner of 1st and Mission.

  6. Jeff Relf says:

    Wolf mentions:
    > unfinished lifeless construction eyesores
    > in prime spots in the center for years to come.

    Shades of North Korea;
    that’s what happens when a government
    borrows excessively.

    • Nat says:

      But these are companies…

    • Harrold says:

      Who is lending money to North Korea?

      • S says:

        I will. There will be North Korea economic bonds yielding minus 8% for 30 years, and the terms of the bonds will be that you get paid when the borrower feels like paying you. People around the world will be lining up to get in on the action.

  7. Les Francis says:

    We have a eyesore half completed apartment building in my suburb.
    The workers were on temporary visas. They went home for Chinese New Year and can’t get back.
    Don’t know when construction will start up again

    • Boomer says:

      There is evidence of missing Chinese families in my neighborhood might be related to Les’ New Year comment. COVID19 fallout only beginning to appear. What happens to residential real estate in California? The mystery of the Asian buyers, declining interest rates, tax exodus, coronavirus affecting consumption? CNBC reported residential refinancing up 26%, new home mortgage applications down. California taxpayers not in the mood for raising taxes. I see more Trump towers on the San Francisco skyline coming….

    • Nat says:

      Huh, that is actually really interesting. I take it this is on the west coast? on the east coast while there is no shortage of temporary foreign workers for menial labor, very few of them (if any) seem to be Chinese.

      • VintageVNvet says:

        This IS a west coast thing to be sure: I bid for a huge mansion on Atherton ”way back in the day, early 1980s”,, was ‘low responsive bidder’,,, but the owner was Asian, and brought in his own guy from HK and the workers too, so I did not get the work.
        Several law suits followed from the architect and engineers who wanted to be paid according to my costing, and not what the owner was able to get from his pal.
        Meanwhile, in FL since 2017, workers on some sites have been completely ”rounded up” by ICE, and only allowed to return with completely legit documents, which means a lot of work stopped for some time.

  8. David Hall says:

    According to the UBS 2019 Housing Bubble Index, San Francisco and Los Angeles are the worse housing bubbles in America. In 2019 Hong Kong and Munich were the worse housing bubbles in the world.

    Southern California home prices rose 7% in January (LA Times).

  9. Paulo says:

    Unfinished buildings=great pigeon habitat.

    Pigeon pie with Madeira and wild mushrooms

    1 hour 30 minutes, plus 3 hours for stock to simmer

    “Louise Robinson’s wood pigeon pie recipe is a fantastically luxurious yet comforting dish, making the most of this gorgeous game bird in all its glory. Louise uses the carcasses to make a rich pigeon stock for the filling, while the breasts are quickly seared before cooking briefly in the pie under a canopy of buttery, crumbly pastry.”

    Reply to JoAnn re: Canada RE prices

    Vancouver prices just increased…… again. However, the big freakout is the anticipated drop in tourism by Intl tourists. Operators are hoping the slack is taken up with NA tourists.

    You know those thriller movies where the ‘hero’ is about to walk down the cellar stairs to see what the scary noise was? I think this is the part where the slasher has his hand on the light switch waiting for that first step down the steps. It is going to be so strange to see empty hockey arenas just in time for the playoffs. Same for Basketball. Baseball?

    • c1ue says:

      You would seriously eat city pigeon?
      Pass.

      • RD Blakeslee says:

        Don’t know about city pigeons – never had to consider eating one. But when I was in the Army (1952) on TDY in the Philippines, I ate quite a few. Nice breasts, no legs …

        • WT Frogg says:

          RD: Nice breasts, no legs………..sounds like some of the other half of the species I’ve known over the years. ;) (Sorry Wolf….couldn’t pass that one up).

      • WT Frogg says:

        c1ue : I’d pass on the city squab too, much rather have city possum and groundhogs…….well fed and very tasty if cooked properly. ;)

  10. Unamused says:

    Strategic mismanagement. Their earlier successes went to their heads. They overestimated their management strengths while underestimating their weaknesses and overestimating their markets. They took on projects with too much risk to impress themselves, thinking they could BS their way through, went in over their heads, and got caught cutting corners and cheating the rules.

    They have similar problems with holdings not mentioned in this article, like Genworth and CASH Financial Services. They were always greedy, but their greed, and overly easy access to credit, made them stupid. Happens a lot.

    The coronavirus pandemic didn’t cause their problems, but it’s likely to put them under. Unlike another developer, Evergrande, China’s most indebted firm, they’re probably not TBTF, but one never knows.

    Does one?

  11. Michael Engel says:

    1) China build silk roads ports, all over the world, during globalization peak.
    2) China build giraffes in SF and LA so that Chinese constructions co
    , financed by the gov, will make money. and future rent, in USD, will keep
    flowing to the CCP.
    3) Iran did the same, before the revolution, on Fifth Ave NYC. It didn’t
    end up well.

  12. Glenn says:

    Because the life of the flesh is in the blood, the life of the economy is in the money. When blood disappears so does life.
    Money in the economy is the counterpart of leaves in nature. Both are a “medium of exchange” that convert energy into profit or yield. In the economy the recession (FALL) is devastating because the wealth that took ±40 years to create “evaporates” in the ±20 year “recession” or half the time it took to create. The result is a 20 year “depression” (WINTER). The depression is a prolonged downturn in economic activity, falling production and great unemployment and destitution. In nature leaves require spring and summer to mature but (FALL) in half the time. Leaves then make use of WINTER to revitalize the soil.

    • Trinacria says:

      It’s tough being an “ant” in a world full of “grasshoppers”. But the ants will have the last laugh.

    • stan6566 says:

      Just as “Chauncey Gardiner“ would have said.

      Or, as someone else may have said,

      Life is a state of mind.

      • Unamused says:

        “The mind is its own place, and in itself can make a heaven of hell, a hell of heaven”

        – Paradise Lost

        On the first hand, people who are depressed usually have something to be depressed about, including Mr. Market, who is manic-depressive.

        Somebody tell me some good news.

  13. Michael Engel says:

    1) China consume about 10% of global the oil production.
    2) In the last two month China oil demand plunged 25% to 30%.
    3) ARAMCO in panic mode. Its market cap declined from $2.3T to
    $1.7T in a short time.
    4) If its a temp spike, the desert kingdom will survive.
    5) If not, they need Putin.
    6) Russia strong hand will transform the ME from a western bastion
    to the eastern block run by China and Russia.
    7) US zoo will exhibit giraffes.

    • MC01 says:

      I wonder if the Saudi government will sell more Aramco shares at the point of a bayonet to raise more quick cash.
      But honestly the Gulf is in deep troubles: the last decade has seen nothing but a continuation of the vanity projects so common when oil was around $100/barrel: Saudi Arabia has raised the combined yearly steel-producing capacity of Hadeed and al-Rajhi (both State-owned) to over 12 million tons… at a time when the Gulf is flooded with Chinese, Indian, Japanese and Korean steel. Then there are the black holes big and small, from the high speed trains to the indoor ski courses, and let’s not forget the money pit companies like Etihad, whose losses are measured in billions dollar. On top of this there are the extravagant military expenses and the opaque “foreign aid” flowing in all directions with little or no oversight… all of this was more or less sustainable when the Gulf has a near monopoly on energy and financial yields were high, but these days both are memories.

      • stan6565 says:

        Was it the biggest indoor ski slope in the world that one, in Abu Dubai? Just think of that rape of nature, the dumb thing needs its own oil well for energising. Or a mini nuke plant.

        I can’t wait to read your report on Etihad. I’ve been watching it closely for a few years now.

        • stan6565 says:

          I suppose my interest really arises at the point when the beancounters figure they have been rumbled and order a wholesale strip out of technical stuff, which then translates into safety factors dropping from say 1.7 to <1.

          That’s when bods start falling from the skies. Not nice.

      • MCH says:

        You take that back… Etihad is not a money pit, it is well respected airline with an excellent record of service. Just like Qatar and Emirates.

        • MC01 says:

          Do you want they see their financials, or to be more specific the financials Etihad shows the world? The stuff of nightmares.
          These Gulf airlines are only viable if the owners keep on pumping petrodollars into them, just like in the rest of their vanity projects. And, surprise, the petrodollars are slowly running out: having the sovereign wealth funds hedge fuel contracts and buy aircraf outright only works as long as energy prices are soaring and yields are high.

          I could not care less about the service provided by money pits, if they lose a ton of money they lose a ton of money: I am not going to sugarcoat the truth. I am not about to start now. As long as the owners are fine with pouring money into them, enjoy, but know Etihad has started a drastic diet that may leave it unrecognizable.

    • nick kelly says:

      OPEC (AKA Saudi Arabia) wants it and Russia (OPEC+) to cut production to boost prices. Russia won’t agree because it can’t. Both Saudi and Russia govts are dependent on oil revenue but Saudi has a cash cushion that Russia with 140 million people, doesn’t.

      We don’t expect to see Saudi manufactures in stores, but where are Russia’s? Why is a science and engineering power house unable to produce a single exportable consumer product? Actually, the science part, measured by published papers etc, has contracted since the Soviet Union.

      Putin’s popularity rose along with the price of oil and is now descending with it. Pensions were increased, now they are being cut. This is largely because the govt must also finance Putin’s Game of Thrones. Alexei Kudrin the former minster of finance resigned/ fired after telling Putin that Russia could not afford a 500 billion $ arms build up.

      Then the ruble lost about half its value in a week requiring big hikes in interest rates. Kudrin has been partially rehabilitated as he and Russia’s highly competent female head of the Central Bank struggled with some success to stabilize things.

      Then oil crashed to new lows.

      Any Russia / China alliance will see Russia as the junior partner.

      • Unamused says:

        We don’t expect to see Saudi manufactures in stores, but where are Russia’s? Why is a science and engineering power house unable to produce a single exportable consumer product?

        Funny you should mention that. Russia’s top export to the US is civilian aircraft parts.

  14. FinePrintGuy says:

    I walk past the Oceanwide pit every day at lunch time. For the last 6 months it’s just a few workers tending to a giant dirt pit. Would love to ask an engineer about water tables, rain and other entropic forces filling the pit back in over the next few years.

    • R Hughes says:

      Another huge problem is the trickle down effect on contractors, sub contractors and 3rd level subs, suppliers of all types, materials ordered and cancelled and others sitting in warehouses, some okay but some rotting away. This does not even begin to touch on the work man’s liens bonding claims, worker comp claims, and all legal stuff, a field day for attorneys if they can get paid. Been thru couple of these on a much smaller scale what a mess. Stopping and restarting a project adds 25 to 40% to the cost so what was barely justifiable economically most likely becomes a white elephant.

  15. IslandTeal says:

    Isn’t it about time for for some “geniuses” at Nutflakes to greenlight a fully funded project to make a SanAndreas type of movie where the rebuilding is started that utilize these buildings to house those affected by the Viruses…..

  16. tommy runner says:

    Yalta’s mulligan ..

  17. DR DOOM says:

    Only Free Fiat money at the tip top of the Fed credit pyramid has the power of first use thus the Cotillion effect benefit. When this advantage no longer functions , the benefit of lower interest rates do not matter because only a few inbred individuals at the top are directing the economy. The bottom are not only suffering from this but the bottom has been robbed by the top of the TIME VALUE OF MONEY. It will get worse because the masses will painfully discover, to late , that the Empire is striking coin using iron not gold . Thus we will not even have full use of the “money” in our pockets. Only gold brings this system down.The top will destroy everything the bottom holds dear to prevent this. What do you hold dear?

  18. any chance California will turn those high rises into affordable housing, and perhaps meet the state mandates? What would that do to residential. In my hood they just voted down a new development which promoters advertised as affordable. Exurbia is no longer the destination. Warehouse these folks in downtown condos, better or worse than ricky ticky Daly City?

    • VeryAmused says:

      “any chance California will turn those high rises into affordable housing, and perhaps meet the state mandates?”

      hahahahaha…/gasp….hahahahaha…no.

    • c1ue says:

      The district which the SF Oceanwide project is in has seen the completion of something like 12 hi rise condo/apartment buildings since 2012.
      Not a single one charges less than 25% over market rate.
      So much for supply and demand mattering. A significant number of them are significantly empty to boot – the owners would rather hold out than accept lower prices.
      It is clear Proposition 13 is what has to change, to cause housing prices to moderate.

      • robt says:

        What market rate do you refer to?
        If they can get 25% over market rate, that is the market rate. If the holdouts can’t get it, and reduce then that’s the new market rate and all properties would be affected.
        Whether referring to buying or renting, same effect.

        • Tyson Bryan says:

          If you control the medium of exchange and also own the building, you simply dictate the rate. Cabal & friends.

        • robt says:

          Tyson:
          Nobody dictates the rent or price unless they want to sit on empty units. There is no cabal, unless it’s a government cabal that sets prices too low and puts you on a waiting list, like Sweden, for 20 to 30 years for an apartment.

        • c1ue says:

          Nice circular reasoning.
          If a monopoly or monosony sets a price, it is the market rate according to your philosophy.
          Fail.

  19. JimTan says:

    This kind of reminds me of the Metropolitan Life North Building in NYC, which is currently home to the US operations of Credit Suisse, and the five star restaurant Eleven Madison Park.

    According to wiki:

    https://en.wikipedia.org/wiki/Metropolitan_Life_North_Building#History

    “The final design for the new building was proposed as a 100-story tower with several setbacks, which would have been the tallest building in the world. However, due to the Stock Market Crash of 1929 and onset of the Great Depression, the construction was halted at floor 29 in 1933. Metropolitan Life had originally planned to have a 100-story tower, and the existing building was constructed to be strong enough to support extra floors. Still, when construction was completed on the 25-story “base” in 1950, there were no plans to build the extra stories.”

    So this planned 100 story building had construction halted due to the Great Depression, and its repurpose as a 25 story building wasn’t completed until 1950. Over 70 years later it became a pretty tony building, but there’s a lot of troublesome history before its was able to achieve this end. I wonder if history is repeating itself?

    • Bob Prechter did a study on the size of skyscrapers and economic collapse. WTC was completed in 73. The new WTC is the same exact height.

      • Andrei says:

        Prechter has even established the Socionomics Institute to study all kinds of such “correlations”.
        Harry Dent uses demographics to predict crashes and published more crash books than Precher :)

    • nick kelly says:

      The Empire State Building was begun just before the Crash and completed around 1932. It didn’t break even until 1954. The lender Prudential twice extended the loan rather than foreclose, not seeing any point.

      • robt says:

        When the biggest tallest building competition is at its apex, the crash is not far behind.

  20. Michael Engel says:

    1) Another shakeout day. The media scare investors.
    2) As long as SPX above the LT danger zone between 2,650 to
    2,800, Mandelbrot days are either for accumulation or distribution.
    3) Violent osc, at this stage, are market makers foot prints in the sand.
    4) Mandelbrot days predict future volatility, but not direction.
    5) The trading range can last between one month to half a year,
    unless there is a quick plunge < 2,650, that will also prick the 2,500 to 2,300 level, depend on the timing.
    6) Its not a good time build a LT position…

  21. Not just ARAMCO. How much coal, oil and gas does the US ship to China, to be converted into iBaubles?

  22. Michael Engel says:

    1) SPX on the way to 3/3 and 3/4 open gap, down below, was not stopped by dma200 at 2 PM. SPX might reach the 2995 and 2975 area today or tomorrow and bounce back up.
    2) US10 @ 0.928%.
    3) Suppose FED Rate will never be underwater. If coronavirus round #1 will
    soon be over, US10Y will rise.
    4) If coronavirus round #2 will resurface later this year, US10 will
    lurch down and swim with the sharks. US yield curve will be inverted < 0 for the first time. What does that mean, if it really will happen.
    5) HYG is junk bonds ETF price. HYG : TLT plunged since Oct 2018, well before coronavirus. The latest weekly candle is a shakeout candle.
    6) XOM will cut production in the Permian.
    7) If both Russia and OPEC will cut production, in combination with US cut
    and the collapse of few US shale guppies, WTI will temporarily stabilized.
    8) US killer whales with the help of wall street and US gov US will transfer assets from the weak hands. Putin will crowning as Saudi king will be delayed.

  23. Rcohn says:

    Just another indication that the world wide bubble is over
    In 1989 the Japanese stock market traded at almost 39,000. It eventually traded down to below 8,000 despite very low Japanese’s interest rates
    The same thing is going to happen to the US stock market and commercial and residential real estate with the FED powerless to stop it unless they go the hyperinflation route , which will destroy the country and

  24. Citizen AllenM says:

    The instability is stunning right now.

    Please review the movie Margin Call.

    We once again slide into great uncertainty with the conviction that this is just another minor bump, instead of a regime change.

    As we leave another failed Asian war, with a crazy president, combined with world instability.

    It just beings me back to my old tag line…

    Someday this war’s gonna end …

  25. Wisdom Seeker says:

    Can any of them be repurposed as coronavirus care centers? Growth industry there!

    Could be a good use for some other underutilized brick-and-mortar commercial real estate as well!

    P.S. I am not kidding. It’s getting real now.

  26. Michael Engel says:

    1) Japan GDP was rising for another 5Y, til 1995, thanks to low interest and demand from US for Japanese cars, camera, Sony TVs and every luxery.
    2) Japan GDP is still #3.

  27. Jon says:

    Hey Guys,

    I absolutely don’t see any effect on the housing price in San Diego/SoCal.
    Infact, the inventory is kind of low and homes are being sold very fast.

    Even the MSM is now touting that because of ultra low mortgage rate along with stock market going down, the real estate would go up as this is acting as a refuge for overseas rich to park their money into…

  28. Michael Engel says:

    1) Russia invested their Capex to export energy to Germany, Europe and to China from the Sakhalin island.
    2) RSX is up from 10 in 2016 to 27 in Jan 2020.
    3) Fred : Russia reserves are in trading range since the 2008.
    It plunge in 2014, but now its back at lower high.
    4) Gold reserves are extra.
    5) Russia don’t produce iphones or cars.
    6) Russia export nuclear plants and fuel, tanks, Sukhoui 35
    fighter jets, SA 400 anti aircraft missiles and are only second to US.
    7) Their most important export is Putin brain.
    8) According to Novak, their oil minister, they can do well in WTI @ 50. Russia devalued the ruble. USDRUS is up from 6 in 1998 to a peak @ 86. Currently it stand at 67.
    9) They are in bed with China, India, Egypt, Turkey and Germany and Europe ex UK…
    10) Tomorrow, during OPEC meeting, Russia will cut oil production,
    oil will popup and few Permian guppies will be saved !!

  29. simont23 says:

    Classic foreign investors. Sell to them at full price. Wait a few years. Buy back at half price.

  30. off we go says:

    try not to get tempted

    allocate

    discipline

    just because you can, doesn’t mean you should

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