I live in BC Canada near Vancouver and I can say that this statement by PJ_Flow is “not well informed”. We have a lot of Chinese exfiltrated foreign capital sloshing through here.
Why build rental properties on real estate with a return on investment measured in decades when you can tear down the rental properties and build condominiums and have a return on investment measured in 18-24 months? If you plop the money down for pre-construction, (and there was a huuuge uproar here about whole floor of condo developments being offered to Chinese real estate speculators before Canadians could even get a chance to bid on them) you get an awesome discount on the properties and could even sell them at a 20% profit before the building was even finished.
No affordably rentable properties need be made available to families, the disabled or the elderly at all.
Building more housing does not mean building more of the housing that locals can afford. Vancouver has a housing vacancy rate of 0.5% (vs a standard city vacancy rate of 2.5%), but has an estimated 11000 vacant properties owned by foreign real estate speculators.
Vancouver is a prime example of building condos over rental housing, and watching local buyers get outbid by foreign real estate speculators offering 50K to 100k over asking.
There are nearly 300,000 dwellings in Vancouver. 11,000 vacant ones equals about 3.6% of the stock. And again, why don’t those owners rent out their units if rental demand is bursting at the seams?
Canadian unemployment is at a record low and BC is where it is best. The workers are finding a way to get to their jobs. The transit system isn’t bad.
The City should go nuts on all the land that they own and put up as much affordable housing as they possibly can. It may not be the most accretive choice for an investor, but it should still be accretive. And after they build it and stabilize it with tenants, they can sell it off.
It’s not just oil and oligarchs driving up real estate prices. Chinese investors who are looking to dodge taxes and other financial regulations in China are parking tons of money in foreign real estate all over the world. Australia, Canada, and even SE Asian countries like Cambodia have all experienced crazy price inflation in their real estate markets due to Chinese money.
Yes! How dare those homeowners in single family neighborhoods not want their streets rezoned into codos and tall buildings and multiplexes. So NIMBY to want the place you chose to live 10, 20 or 30 years ago to not get scraped and rebuilt as a “high density” (ie, condos and tall buildings and duplexes and slot homes…) Those poor developers just can’t buy a break.
Hypothesis: They don’t care about the facade, all they care about is a long term store of wealth, a investment. They will hold on to the apartments until they can sell it for more then they paid for it. The rent also comes with extra costs and overhead they would rather avoid.
Selling a apartment building with renters in it will also probably net you less then selling it without. This seems paradoxical but for new renters you can charge the going market rate, for existing renters you may not be able to raise it more then a few percent per year. Also kicking out existing renters can be hard.
Really interesting take on why the housing market is so inflated!
I would like to add Amsterdam to the list of cities that are hit by this problem. As an added bonus, you can hand over management of your building to a company that will put it on Airbnb. This way you still get quite a nice monthly income but no pesky permanent renters with renters rights and no limit on how quickly you can increase the rent prices.
My view is that a lot of rich Chinese and Russians have bought large amounts of inflated property in London and New York, etc. because if and when the shit hits their fan at home, they can get out of the country and settle somewhere safe with a big store of non-portable property.
Suppose you’re a Russian oligarch. You invest $100 million in central London high rise apartment buildings. For some reason Putin turns against you, and you have to flee Russia.
You end up in the UK with a property portfolio worth at the worst $50 million allowing for serious deflation.
Don’t forget you need luxury properties to create and further develop a luxury property market. If you need to launder 100million you don’t need tenants, you don’t want to be a landlord. You just need a (basically virtual) market to buy and sell. The new top-end apartment building will retain (and probably increase) its value for some years, because someone else will want to buy it for laundering his 120million - with or without tenants.
I’ll take backstories for characters in a William Gibson novel/upper-teen market Cory Doctorow-juvie for $500, please.
Geert was in deep shit and he knew it.
He and Willem thought they’d been so clever, booking a luxury apartment through a fake Singaporean AirBnB account routed through Tor relays. The party had been amazing, full of beautiful boys and girls getting high on the latest offerings from the designer drug labs of Belgrade; now Willem was bleeding out on Geert’s mother’s favourite rug.
Believe it or not, the U.S Treasury is aware of, and actively working on this–only because, one assumes, the president has no idea what FinCEn is. They began requiring title insurers to report buyers’ identities and funding sources a few years ago, and have been expanding the program to more and more cities, while lowering the threshold of pricing that triggers the scrutiny:
Don’t know how they’ve escaped having their budget gutted by the current admin, but maybe Mnuchin really is as dumb as he looks.
I think we live in the city and I bet I know the development to which you refer…
I would argue that both groups impede sensible urban development, although I have more sympathy for the NIMBYs. Ultimately, though, both groups have been major factors in urban development for over a century and the recent proliferation of extreme unaffordability is relatively new. Turning to the role of global capital helps explain how the situation has gotten so dire.
IIRC, there are a rather small number of banks that facilitate financial shenanigans like money laundering, spam email scams, and the like. Regulations on legitimate banks that put a lot of paperwork in the way of any transaction with a known corrupt bank would put a serious damper on the criminal party. Sadly, banks have gotten very good at suborning politicians to prevent any encumbrances on the free flow of money. (A bank is a money pump that takes a percentage off of all the funds that flow through it - the more money they are allowed to pump, the more profit they make).
Remember Mikhail Lesin who was recently knocked off in a DC hotel room?
“Lesin died in a Washington, D.C. hotel room under unusual circumstances. His family initially said the cause of death was a heart attack, but, after a year-long investigation, Washington’s chief medical examiner and federal authorities released a joint statement saying he died of blunt-force trauma to his head sustained in his hotel room, induced by falls amid acute ethanol intoxication.[3][4] A leaked report by Christopher Steele for the FBI said Lesin was bludgeoned to death by men working for an oligarch close to Putin.” -Wiki
Not saying is was laundering but, it was probably laundering.
