For years central London's high end property market was the preferred investment opportunity for the world's richest buyers. If you had £100 million to spare then there was a charming pied a terre in Mayfair with your name on it.
Hundreds of Russian oligarchs led a stampede through Belgravia and Mayfair, buying up assets to protect their cash from their faltering economy. Desperate to get their money out of Moscow and park it somewhere safer, they sought out top tier properties in desirable districts of London.
But as currency rates and value for money fluctuate, New York City has come to be seen as a better prospect. It's not just super rich Russians who are playing the city's property markets, of course — nor is New York their sole target.
The truth is that a startling new form of colonialism has arrived, one where the super wealthy dramatically change the geography of a desirable city through investment, building, purchases and access.
If you live in Manhattan you will know that entire neighborhoods have had their character transformed. The scale and the nature of the changes — where a centuries old street gives way to the glass and steel towers with white gloved doormen for example — is breathtaking.
Whilst middle class America deals with the fallout of a housing collapse and a buyer’s property market, a new gentrification on steroids is swooping in around them and turning districts that were once the home of artists and immigrants into battery farm apartment complexes for stockbrokers.
San Francisco, New York and Houston are on the front lines of this colonial expansion by the nation’s richest buyers. Critics who suggest its another example of a boom before bust cycle have not been paying attention.
There are qualitative differences between this buying cycle and the ones that preceded it. First there's the matter of the passports of the principle buyers.
They have not come as part of a wave of gentrification. They have come to park foreign money in U.S. investments. In many cases they will not even reside at the addresses they have purchased.
These are investments, not homes. Call it 21st century absentee landlordism based roughly on the Irish 19th century model. The difference is that the modern property does not produce revenue. It is revenue.
The first clue that something deeply un-American is going on should have arrived when builders started constructing so-called poor doors for the paltry number of working class tenants who are mandated to live in these Manhattan superrich skyscrapers.
City law mandates that a trivial percentage of the apartments in any new luxury building be earmarked for working class renters. That meant ordinary people could potentially rub shoulders with the fur coated penthouse dwellers, drastically reducing a building’s prestige.
The solution was to build utility entrances for the working stiffs so that no one on the upper floors would ever have to see them. Think of those new skyscrapers as early century versions of an ocean liner like the Titanic.
Upstairs you have the grandees living the good life as those trapped below in steerage are never permitted to show their faces.
The difference is these skyscrapers are dry docked and it’s the poor who will voyage as their rents balloon as their purchasing power and their access shrinks.
Here's a question: didn't our Irish ancestors come to America to escape the world of exploitative aristocrats who made life intolerable for the locals from the mere presence of their high end estates? Don't we see a parallel here yet between modern times and the 19th century?
It would help if our political leaders would do something other than role out the red carpet for our new superrich overlords, but that's not going to happen. Mayor Rudy Giuliani paved the way, Mayor Michael Bloomberg signed the invitation cards and Mayor Bill de Blasio has signaled that this top tier buyers market will be his priority in office.
Do not be dazzled by the chimeric dream that you will be a part of this. You will not qualify for one of those “affordable” apartments on offer in the high rise luxury condos that are utterly transforming venerable neighborhood after neighborhood.
Some 98,000 people recently applied for a shot at 50 units in a luxury Long Island City building. On reading the fine print, though, it became clear that unless you made barely enough to feed yourself, you would be over qualified.
The message is Manhattan, like San Francisco and elsewhere, is now the exclusive property of the superrich and the grindingly poor. If you want to live in a more equitable city build a boat and set sail.
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