Upon awakening, Karine realizes that the apartment blocks are still not completed. However, she also realizes that lots are in finite supply, and represent a much bigger share of the costs in this city than they had in the swamp village or in the previous town.
As such, she buys the condo tower’s blueprint, in hopes of making the cost back by selling one for a much higher price than an apartment block would possibly command in this city. So rather than requiring four lots to get to the three million talas, and the other two requirements, I can get it done with three, and it would cost us only 100 more tons of materials. Now that’s what I call densification!
“Ouch! The town ordered us to get the homeless refuge to three stars!” Billerica scolds her while she’s shopping for second-hand homes to buy so that she can get the condo tower built.
Here it seems like even a multigenerational house could fetch six-figure prices. However, she only puts one of the apartment blocks for sale, and realizes that using the construction bots to build an elevator shaft for 8 people will be much less expensive than buying a ready-made elevator of the same size, which she feels is more practical to its tenants than a grand staircase or an art gallery.
However, she buys a multigenerational house, which gets demolished in a matter of minutes. And the apartment block price limit is apparently a measly T600k, which also finds a buyer in minutes.
But then, as she puts the second apartment block for sale, the owner of the first one also puts it for sale, and, no longer bound by the terms of the HCP, asks for a much higher price than the price Karine sold it for.
“What’s going on here?” Karine asks her colleagues about how housing prices go way up. “It seems like the HCP terms force us to sell at below-market prices!”
“What do you mean, below-market?” Billerica asks her, bewildered by the statement.
“I sold an apartment block for six hundred thousand talas, the maximum authorized under the HCP. However, its new owner put it for sale at a much higher price immediately. Now I have a much better idea of why people seemed hesitant to get housing starts done! And this means we need to build our own projects outside of the HCP!”
“Fine, if that’s what it takes to repay our debts!” Yenaleda sighs.
This makes me feel like it’s a lot easier to earn money in hell by playing the real estate market than it is to build more housing units! It’s the closest thing to a “get rich quick” scheme in hell! Karine has more bulbs flashing in her mind. She also feels like urban densification isn’t necessarily the answer to the housing crisis in hell.
“I wonder what has been done to curb real estate speculation”
“You want to become caliph instead of the caliph again?” Karine’s boss asks her, while his face turns green. “It wasn’t enough for you to suggest that homeless refuges should be built, you also feel like it’s necessary to get speculation under control! All I know about homeless refuges is that it’s the same as any other real estate property to me, and real estate speculation is flying way over my head!”
“I will discuss that with you but later, please...” Yenaleda sighs, while returning to her work.
Back on the console, Karine then buys a multigenerational house for almost twice the HCP limit on that type of house. Which takes up much of the day between demolishing it and later, building the condo tower.
Speaking of which, it’s actually not that tall compared to what Karine saw being built, not only on Earth, but also on this world. A measly six floors, and five units per floor. Is that what they call densification in Hell? Building 30 units where only one previously existed is one thing, but I wonder if the Senate is considering other measures. However, I don’t wish an Evergrande kind of situation on them; their lives are already hard enough as it is.
As the condo tower is being built by nine bots, another change order arrives to them:
“Karine, it appears the city realizes that an apartment block-sized homeless refuge is not big enough; they instead want a condo tower for that purpose!” Billerica screams at her.
“I didn’t get to it yet. However, you asked me about condo tower-sized homeless refuges when we started building homeless refuges. Now that we are building them...”
I guess, I planned for my materials stockpile to last me through one condo tower, one apartment block and the business center. Now I need to make up for the shortfall, Karine then places the order for 1000 tons of construction materials, costing her another T75,000. And, of course, she remains on the lookout for properties that might be worth buying to get the necessary plots to fulfill the contractual obligations to the city. As much as I would have hoped for the waters to recede from the city’s lowest level, the water level is not yet low enough to safely build on the lowest level.
And yet, even in this city, even foreclosures are not a guarantee of lower prices. However, unlike so many speculators on this world, she doesn’t mind buying one, under the form of a multigenerational house, as is too common in the outer portion of the city. However, Billerica slips away from the cabin in the forest to buy food; the pantry is empty.
“I have an idea: establish a shell company, which will buy the condo tower upon completion, and then sell it on the open market. We need Billerica to issue me an IOU for the HCP price limit of the condo tower once the shell company is active, though and the profits will be used to buy some plot of land to build more housing on” Karine explains to her colleague.
The narrative has been illicitly obtained; should you discover it on Amazon, report the violation.
“We worked so hard to get more housing starts, and then you think of doing what you accused others on this world of doing to worsen the housing crisis?” Yenaleda scolds her. “Wouldn’t it be better to sell the individual units instead?”
“No, since the HCP rules mandate that, if we sell buildings built under its provisions, the whole building must be sold all at once. Except that we’ll be using the money to get more housing starts done, and not as a speculative investment! I’ll pay Billerica the cost of materials to build more condo towers elsewhere, as well as of extra bots”
“Seriously? How much do you think thirty-unit condo towers fetch in this city?” Yenaleda’s eyes start widening.
“Most of the city’s condo towers of comparable size are in the inner city, so I might think it would be lower”
“I believe it would be better if I was the one to start the shell company; there is no telling what legal complications could arise from off-worlders starting a shell company” the female Taladuan begins filing the paperwork for starting a numbered company.
Yenaleda finds it ridiculously easy to get the shell company started, and headquartered in her boss’ cabin. However, she finds it easier to get a loan than she expects getting Billerica to issue an IOU to her to be. Especially since the Senate ordered banks to extend loans to entities wanting to operate affordable housing for rent at favorable terms, such as lending at the reference rate.
Yenaleda takes out a loan in Karine’s stead since Karine is clueless about Pandemonian banking practices. She takes out a loan for 1.53 million talas with a future condo tower as collateral, in which origination fees of T30k are included.
At the same time, while the condo tower is built, Karine buys another multigenerational house its previous owner deemed irreparable, having suffered damage from the poor weather. And not on the lowest level. Whose demolition is underway, and then the construction of the business center begins. Which is somehow fully rented out within a day of its construction even being announced.
But when Billerica returns, with a big bag full of frozen fried toilets, Yenaleda is busy not simply negotiating leases for office or retail space, but also waiting for Karine’s signal to buy the condo tower. However, the construction of both buildings is estimated to take the rest of the work day because of the weather.
Which Karine spends monitoring the real estate market for another low-density house to buy and demolish, even if it meant building it somewhere else in the district.
“One question: if we finish building what the HCP contract asks for, can we keep building new units outside its scope?” Karine asks her boss.
“Yes, but we won’t be able to buy materials at a preferential price”
This means I must buy the materials to build more condo towers before the homeless refuge is finished, Karine comes to the grim realization that even the largest batch she’s allowed to buy would only be enough to build two condo towers. But she can feel like Yenaleda is so confident that condo units will sell that maybe all it takes is two more condo towers.
Speaking of condo towers, by nightfall, the condo tower is completed and Karine signals her that the condo tower is up for sale.
“Now, Yenaleda, now!” Karine hollers while the female Taladuan stands ready to buy it.
It seems like Taladuan banks prefer “the devil they don’t know” over “the devil they know” in that they’d rather lend money to brand new businesses than to insolvent ones that are already in operation for a while, Yenaleda starts thinking about why she would even open what amounts to a throwaway business.
With the condo tower now being in Yenaleda’s possession, she starts listing the individual units, rather than the whole building all at once. She is able to earn back the money she borrowed in very short order, since, somehow, condos in this city could go for as high as T150,000 apiece. And yet, this is nothing compared to the prices in Pandemonium.
Once Yenaleda’s loan is fully repaid, she starts paying what she calls dividends back to Billerica. Which are paid out to the construction budget for the most part.
Karine then uses the dividend money to buy three lots, spending nearly T600,000 on second-hand homes, but only T170,000 to buy four more bots, and T250,000 to buy another batch of 5000 tons of raw materials. She demolishes all three lots simultaneously, but can only build the homeless refuge overnight.
“Dividend money? What’s the meaning of this?” Billerica yells at Yenaleda.
“I thought that starting a shell company to sell the condos piecemeal would be a good idea, especially since people are willing to pay for condos!” Yenaleda retorts. “And the HCP rules force you to sell buildings whole!”
Karine then turns to Yenaleda. “This looks far too much like the beginnings of Evergrande! And then you would be Hui Ka Yan!”
Yenaleda rolls her eyes, while Billerica prepares to air-fry the toilets. “Evergrande? What the hell is Evergrande? Who Hui Ka Yan even is?”
And then the two Taladuans are treated to the story of Evergrande, the largest real estate bankruptcy in Earth’s history, while waiting for the fried toilets to be ready. Karine’s mind starts making her head spin as she discusses the early days of Evergrande, and how the contexts differ between today’s Taladu and mid-1990s China.
“The parallels between you and Hui Ka Yan’s early days in business are troubling. Borrowing to buy land, or properties under construction, then pre-sell the units while they are being built, or even before construction begins, and then repay the debts!” Karine scolds Yenaleda. “It might be a good idea today, but this business model can’t be sustained forever!”
“What do you mean, it can’t be sustained forever?” Yenaleda gasps.
“It will depend on how housing prices evolve, but they won’t increase forever, especially not if housing deliveries grow faster than the population at some point!” Karine explains to a bewildered Yenaleda.
“But the Senate seemed to be more concerned about housing starts!” Yenaleda retorts.
“Upon completion of the homeless refuge, the city will lease it from us, and then we’ll start building the condo towers!” Billerica starts preparing to sell 60 condos on the market, hoping to capitalize on the prices they fetch to pay back his debts.
As a licensed insolvency trustee, keeping abreast of economic news, especially of what can cause one to become insolvent, is essential, Karine thinks, while eating a fried toilet, and starts getting nauseated over the actions of her colleagues. I’ll gladly audition for some role in a horror movie centering around post-pandemic Evergrande, but it would depend on the roles; I’d be most likely be cast into a role involving Evergrande’s non-Chinese assets or insolvency filings, though. If I am cast at all. Not sure a horror movie centered on post-pandemic Evergrande would find much success at the box office, nor would such a movie even feature insolvency professionals in anything remotely resembling a major role. I believe it would more likely that a wronged owner of an unfinished condo would be one of the leads, either causing fear or feeling it, and some Evergrande official would be on the other end, if anyone other than me was writing the script, she starts thinking about writing her own horror movie script before reaching for the waste closet.
Meanwhile, far away from the cabin, squatters occupy the other two lots they own that are slated to become condo towers.