Elevated home sale activity continues to outstrip the supply of homes for sale in…
A few years ago, an article in Newsweek stated: “Across the globe, empty luxury apartments darken many of the most desirable cities—Miami; San Francisco; Vancouver, British Columbia; Honolulu; Hong Kong; Shanghai; Singapore; Dubai; Paris; Melbourne, Australia; and London. The reason: The world’s richest people are buying these grand residences not to live in but to store their wealth.” This article is not unusual; quite a few articles claim that luxury towers around the globe are being turned into empty “ghost apartments.”
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Commentators are divided on how to handle this alleged problem; some cities have instituted or proposed taxes on second homes to discourage “ghost apartments,” while others use their existence as an argument against new market-rate housing generally. For example, in an article criticizing supporters of new housing construction, Nicole Gelinas writes: “New York’s new luxury towers are notorious for being empty, owned by absentee millionaires and billionaires looking for an investment rather than a home.” But how common is the “ghost apartment” problem?
A 2017 study from the London School of Economics suggests that even where foreign investment in housing is widespread, very few foreign-owned units are in fact “ghost units.” The study found “almost no evidence of units being left entirely empty—certainly less than 1%.” The authors of the study interviewed over a dozen building managers and developers in new buildings with high levels of foreign ownership; some stated that 90 percent or more of units were occupied, while one stated that 70 percent were fully occupied and 30 percent were used as second homes. The authors also interviewed concierges for four large new buildings; they estimated that between 50 and 75 percent of units were rented out, and that no more than 0-2 units per building were entirely unoccupied (p. 19).