The high-end residential developments that have come to dominate Manhattan have the potential to generate not only tax revenue, but also solitude.
Talk about investing in the future. A Chinese woman recently purchased a $6.5 million condo in the One57 building in Midtown Manhattan, which is to be New York’s tallest residential tower when it's completed next year. She wasn’t buying the place for herself, she explained to her broker, but for her young daughter. Her very young daughter. From the Daily News:
“We’re running around the city looking at things, and I finally said, ‘Why exactly are you buying?’” broker Kevin Brown, of Sotheby’s International, told CCTV News. “She said it had to do with her daughter, who was planning on going to Columbia or NYU, maybe Harvard, so she needed to be in the center of the city, and that is why she was picking this one particular apartment,” Brown said. “I said, ‘How old is your daughter?’ And she said, ‘Well, she’s 2.’ And I was just shocked.”
Shocked he may have been -- although the One57 pad was kind of low-end compared to the $88 million, 6,700-square foot Central Park West apartment that Russian fertilizer mogul Dmitri Rybolovlev bought for his (18-year-old) daughter’s alleged use in 2012. In truth, the Chinese millionaire’s forward-thinking purchase was hardly unusual. The high-end real estate market in North American cities such as New York, Miami, and Vancouver has been dominated by foreign investors for years now, with buyers forking over huge sums of money to buy deluxe apartments that they or their lucky offspring might intend to occupy for a few weeks here or there, or in the far future, if ever.
The trend has left some upscale urban neighborhoods feeling hollowed-out.
In New York, luxury ghost apartments have been steadily proliferating, with certain parts of Manhattan especially devoid of life According to a 2011 New York Times article, in the chunk of the Upper East Side where the Chinese woman bought her little girl a future dream home, “about 30 percent of the more than 5,000 apartments are routinely vacant more than 10 months a year.” Census figures from 2010 show that since 2000, there was a 70 percent increase in absentee-owned apartments in Manhattan, which jumped from 19,000 to 34,000, with the wealthiest neighborhoods seeing even more pronounced gains. The trend, which reversed briefly after 2007 because of the recession, has been building again -- to the point where real estate blog Curbed made fun of the Times for even taking note of it in yet another piece earlier this year.
Some wealthy residents of these lonely luxury abodes, reports the Times, report feeling isolated. And while it may be hard to feel much sympathy for well-heeled people who find themselves rattling around the hallways with only an attentive building staff to chat with, the effect on the surrounding neighborhood is real.
In some parts of Vancouver, where attracting residential development in the city’s urban core has been a point of pride of city planners, the effect is tangible. As many as 25 percent of the condos in the city’s Coal Harbour neighborhood are owned by “non-residents,” with mixed results for the city, according to a CBC News report:
"They pay lots of money in taxes and use very few city services,” said Tsur Somerville, an associate professor at the UBC Centre for Urban Economics and Real Estate.
But there is a downside to having so many vacant units.
“From a city revenue standpoint these units are wonderful. On the other hand, most of us don't want to live in a ghost town,” Somerville added.
The high vacancy rate means less business for neighbourhood shops and and restaurants in Coal Harbour....
Nonetheless, Yan said some Vancouver neighbourhoods may appear to be very dense, but actually are not.
So it seems that the high-end residential developments that have come to dominate much of Manhattan and other gentrifying downtowns have the potential to generate not only tax revenue, but also solitude -- not only for the people who have the money and desire to buy that elusive and not always desirable commodity, but for their neighbors as well. Absentee buyers may be investing in their own future, but it's questionable what the return will be for the cities that are taking their cash.