Who owns the city? How urban real estate became the corporate asset class of choice

New York City is still the world's most popular land bank. Image: Getty.

The term “gentrification” does not quite capture the massive changes that have been happening in a growing number of cities worldwide in the last few years. In mid-2014 to 2015 alone, more than a trillion dollars was invested in real estate in just 100 cities across North America, Europe and Asia; this is excluding properties priced under $5m and sites available for development.

Something else is happening. Urban land – not just buildings, but also undeveloped lots – is considered a good investment at a time when financial markets are shaky. As a result, worldwide investment in urban land is increasing rapidly.

There are diverse indications of this, which I explore in depth in my book, Expulsions. For one, the top 100 cities – as ranked by level of property investment – account for 10 per cent of the world population, but 30 per cent of the world’s GDP (its overall economic output) and 76 per cent of the world’s property investment. So wealth is clearly being concentrated into a select group of urban areas.

Another disturbing sign is that worldwide real estate assets amount to $217trn, according to Savill (one of the leading expert firms on real estate). This represents 60 per cent of the value of all global assets, including equities, bonds and gold. And let’s not forget that when a piece of real estate becomes an asset, it has been financialised – which opens up all kinds of possibilities to raise the property’s value.

That said, it’s important to keep things in perspective. Although the world’s GDP is about $270trn, this is dwarfed by the value of finance: measured by outstanding derivatives (the basic measure for finance), it is worth over a quadrillion dollars.

Home, sweet home?

There are a couple of signals that this trend has something to do with investment, rather than, say, more people moving to these cities to buy a house and start a family. Let’s focus on some of the most desirable luxury buildings in Manhattan in New York – though we could have taken any of 25 or even 50 major cities in the world.

The trends I describe capture something about the desirability of investing not only in property but, perhaps especially, in urban land. This is significant in a world where much land is dying – due to desertification, floods, mining, plantation agriculture, deforestation or poisoning from mining operations.

In 2014, 54 per cent of sales of real estate priced over $5m in Manhattan were made to shell companies – companies used as a front for other operations. If we break it down into specific buildings, and take the most famous and highly-valued Manhattan buildings we find similar numbers.

Bloomberg Tower. Image: Jaroslavd/Flickr/creative commons.

Here are some relevant cases for the last few years. In the Warner Center in Manhattan, 122 of the 192 condos are owned by people who used shell companies, which hide their identities. In the Bloomberg Tower, 57 per cent of condos are owned by shell companies. And in The Plaza, 69 per cent of condos are owned by shell companies. We can observe the same trend in other cities, such as London, where 22,000 properties had been left empty for more than six months, as of February 2016.


Several major US cities saw rising investments (both national and foreign) in urban properties, from offices to high-rise apartment buildings, hotels and retail. New York led, with $70bn from mid-2014 to -15, followed by Los Angeles Metro and San Francisco Metro. These top recipient cities were followed by Chicago, Washington DC, Dallas and several others.

We see similar trends abroad, with London, Paris and Tokyo among the major recipients. In some cities, it was mostly foreign investment: for example, in London, Dublin, and Amsterdam-Randstadt. In others, it was primarily domestic investment, such as New York, Moscow and Beijing. And in many it was 50:50, as a result of the growth of foreign investment – notably in Paris, Sydney, and Vienna.

Who owns the city?

Periods of high levels of foreign investment have recurred in cities such as New York, London and Hong Kong over the decades. When I was doing my research for The Global City in the 1980s, I found multiple nationalities in the ownership of much of the City of London. In New York and Los Angeles, the acquisitions by Japanese and Middle Eastern investors had become more prominent, alongside the long-standing European investments.

But what marked these investments in the 1980s was utility. The buyers wanted and needed to be in New York or London. Today, the high incidence of shell companies is more about storing money and hiding it, than actually using the buildings.

Building big in central London. Image: lucyrfisher/Flickr/creative commons.

These days, I would argue that whether the investment is foreign or national may matter less than the fact that it is corporate. Corporate investment tends toward large-scale projects; either in large developments, or in smaller urban plots that are assembled into one larger plot. Often, existing properties are torn down to build entire new mega-projects – taller, larger, fancier than what went before.

This kind of large-scale urban development entails significant shifts in ownership; from small or medium businesses to large corporations, or from public to private. Some of the most noxious “site assembly” developments happen when a single owner buys one or two city blocks, and the city authorities cave in to their requirements by eliminating little streets and parks, and privatising everything.

We are witnessing a deep history in the making: a systematic transformation in the pattern of land ownership in some of our major cities. Whether it’s national or foreign, large-scale corporate investment absorbs much of the public tissue of streets and squares, and street-level commerce. It shrinks the texture and scale of spaces that are accessible to the public, and ultimately changes the very character of the city. If we’re to safeguard equity, democracy and rights in urban areas, we must first ask ourselves: who owns the city?The Conversation

Saskia Sassen is Robert S. Lynd Professor of Sociology at Columbia University.

This article was originally published on The Conversation. Read the original article.

 
 
 
 

Does it matter that TfL are renaming White Hart Lane station Tottenham Hotspur?

New White Hart Lane. Image: Getty.

Pretend for a moment that you’re travelling in the London of 1932. You’re taking the Piccadilly Line northbound and alight at Gillespie Road station. The name should be obvious: it’s inscribed in bespoke brown tiling on the platform.

But that 31 October, following an intense campaign by the eponymous football club, the London County Council changed the station’s name to Arsenal (Highbury Hill). The area’s growing association with the name “Arsenal” ended in a lengthy negotiation that changed maps, signs and train tickets alike. Football had acquired so much power that it changed the name of not just a Tube station but an entire suburb, even before the era of Wenger or the Emirates.

Now the spectre of name changes is on the horizon once again. As Tottenham Hotspur FC inches closer to completing its new stadium, the club is clamouring for a renamed Overground station. Despite the fact the new stadium is located on almost exactly the same site as the old just off White Hart Lane, and fans have long been calling the scaffolding-laden mess “New White Hart Lane”, the club’s executive director is adamant that the station’s existing name cannot stand. White Hart Lane station, on the Overground line leaving Liverpool Street, is set to be renamed “Tottenham Hotspur”, at a cost to the club of £14.7m.

Little has been made of the fact that this peculiar PR kerfuffle is tied to Spurs’ failure to convince Nike to sponsor the venue. Some sources have even claimed that the sponsorship is yet to be finalised because it is somehow contingent on the renaming of the Overground station; beyond the ridiculous Johnson-era vanity project that was the Emirates Air Line, it seems improbable that TfL will allow any more corporate-flavoured information pollution. There will be no “Nike Stadium” station on the way to Enfield, much as there is no “Emirates” on the way to Cockfosters, especially if public consultation gets a look in.

The scene of the crime. Image: TfL.

But there’s a problem with the new name, all the same. “White Hart Lane” already means “football stadium”, in the same way Loftus Road or Stamford Bridge do. Changing it to “Tottenham Hotspur” risks opening the floodgates to an “O2 North Greenwich” or a “Virgin Euston” at some point in future, names as banal as there are dystopian. The Greater London Authority has promised to spend the £14.7m fee on community programmes in the local area – but that’s not much money to set the precedent that a private company can mess about with the Tube map.


What’s more, as CityMetric has often observed, there are plenty of station names across London that could do with a tidy up. Picking one that’s perfect already and asking for £14.7m to change it is adding insult to injury. How much would it cost a community group if they asked to change the name of Goodge Street to Fitzrovia? Why does a vast corporate entity backed by international sponsors and thousands of season ticket holders get to set the standard?

Back in Arsenal’s day, changing names on the Tube must have been easy; changes could be accommodated gradually without bothering the every day traveller. But in our world of online information, maps and apps, name changes are rather more complicated.

The question is – if TfL can bring itself to balefully accept this particular proposition, why can’t it accept ours? Why sort out a single non-issue on the Tube Map when you can catch lots of real ones in one go? A day’s pandemonium might just be a price worth paying to fix the Bethnal Greens problem once and for all.