Richard Florida is a co-founder and editor at large of CityLab and a senior editor at The Atlantic. He is a University Professor and Director of Cities at the University of Toronto’s Martin Prosperity Institute, and a Distinguished Fellow at New York University’s Schack Institute of Real Estate.
The most important cities for the ultra-rich, and what it might cost those places.
London, Hong Kong, and New York rank as the top three cities for the ultra-rich, according to the 2012 Wealth Report released by real estate firm Knight Frank and Citi Private Bank.
The report is based on detailed data on the number, distribution, and preferred locations of high net-worth individuals (defined as households with more than $100 million in assets). This is the globe-straddling capitalist over-class that Cynthia Freeland has dubbed the "new global elite," or what the report itself labels the global economic "plutonomy" of the "richest 1%."
There are now 63,000 households worldwide with $100 million or more in assets, up 29 percent since 2006 and projected to rise even higher in the future. The top ten current preferred locations for the ultra-rich are:
- New York
- Hong Kong
The report also asked respondents to predict the most important cities in 10 years. The projected key cities of 2022 include:
- New York
- Hong Kong
- São Paulo
On this list, Beijing and Shanghai move up, displacing Paris (which falls from fourth to seventh) and Miami (which drops off the list completely), along with Hong Kong and Singapore. Sao Paulo, Brazil, moves onto the list in eighth place.
What's behind these rankings? According to the report, the ultra-rich value cities that offer "personal safety and security" most, followed by "economic openness" and "social stability" which top "luxury housing" and "excellent educational opportunities." As the report's authors explain:
The most significant driving force of any city is its people. It is crucial to have a livable environment for increasingly mobile populations, and to attract a significant workforce. More than one-third of the people in New York and London are foreign-born. Despite their astonishing growth, Asian economic powerhouses fail to reach that level of cosmopolitan culture. New York or London will continue to top the indices, but only if they ensure their strong cultural offers are unmatched and maintain open immigration policies.
But the rise of global superstar cities also has a dark side. According to Barron's Richard Morais:
Anyone who has recently tried to make their way through the thronged pavements of Piccadilly in London knows there’s another, more important and less politically-correct answer for why certain cities in the West will remain top dogs. The reason is flight capital. The globe’s rich aren’t really moving to London or New York – they are fleeing their home countries and cities.
Any private banker will tell you, that as soon as a centa-millionaire in Moscow, Beijing or São Paolo makes their fortune, the first thing they do is figure out how they can ferret away large chunks of that wealth to countries that guarantee political and personal freedoms, have sound legal systems, a favorable tax environment, good security and good schools for their kids. Those last two items are not to be underestimated. When asked what was the most important factor drawing them to a city, 63% of the globe’s super-rich said “personal security” and 21% said “education.”
The rise of these protected enclaves is creating very real tensions between the very wealthy and more average city residents.
Just one example - high-end apartments and townhouses in London and New York regularly top $50 million, pricing locals out of the market. It's no coincidence that London boiled over into riots last summer and that the Occupy movement was born on Wall Street.
There is a very real danger that such disruptions are a "feature, not a bug" of global cities. As the Financial Times wrote last summer:
Globalisation has made our great cities incalculably richer but also increasingly divided and unequal. More than youth, ethnicity or even race, London’s riots are about class and the growing divide between the classes. This dynamic is not unique to London but is at work in many of the world’s great capitals. Instead of reducing and flattening economic distinctions, globalisation has made them sharper.
We make a big mistake when we look out across the peaks of privilege from our eyries in London, New York, Tokyo and Mumbai, and tell ourselves that the playing field is level. Our world, and especially its cities, is now spiky and divided.