This is what puts the “New York” in the New York Times: a spectacularly researched and gripping story of not only how the influx of global money is transforming the New York’s real-estate market and skyline but also the implications for cities like Vancouver.
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Stream of Foreign Wealth Flows to Elite New York Real Estate
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Behind the dark glass towers of the Time Warner Center looming over Central Park, a majority of owners have taken steps to keep their identities hidden, registering condos in trusts, limited liability companies or other entities that shield their names. By piercing the secrecy of more than 200 shell companies, The New York Times documented a decade of ownership in this iconic Manhattan way station for global money transforming the city’s real estate market.
Many of the owners represent a cross-section of American wealth: chief executives and celebrities, doctors and lawyers, technology entrepreneurs and Wall Street traders.
But The Times also found a growing proportion of wealthy foreigners, at least 16 of whom have been the subject of government inquiries around the world, either personally or as heads of companies. The cases range from housing and environmental violations to financial fraud. Four owners have been arrested, and another four have been the subject of fines or penalties for illegal activities. …
Vast sums are flowing unchecked around the world as never before — whether motivated by corruption, tax avoidance or investment strategy, and enabled by an ever-more-borderless economy and a proliferation of ways to move and hide assets.
Alighting in places like London, Singapore and other financial centers, this flood of capital has created colonies of the foreign super-rich, with the attendant resentments and controversies about class inequality made tangible in the glass and steel towers reordering urban landscapes. …
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Video illustrations accompany the article.
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The high-end real estate market has become less and less transparent — and more alluring for those abroad with assets they wish to keep anonymous — even as the United States pushes other nations to help stanch the flow of American money leaving the country to avoid taxes. Yet for all the concerns of law enforcement officials that shell companies can hide illicit gains, regulatory efforts to require more openness from these companies have failed. …
In many ways, the government has allowed the real estate industry to turn a blind eye to the source of money used to buy luxury properties.
This opacity presents challenges for law enforcement officials, who say billions of dollars in suspicious money move through shell companies each year. “It can be very, very difficult to penetrate who is the beneficial owner of these shell companies,” said Leslie R. Caldwell, chief of the Justice Department’s criminal division.
She said that the department’s Kleptocracy Initiative has found that foreign officials often use shell companies or immediate family members to move large amounts of money to United States real estate. …
About a year ago, after the Group of 8 industrialized nations issued goals requiring identification of shell company owners, a British representative met with Justice Department officials to complain about the United States’ failure to comply.
According to two people at the meeting, the British representative, Dominic Martin, delivered a stern message: The lax American laws were being used by other countries as an excuse for inaction.
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Which, of course, raises the question about the nature and accounting of the Vancouver market. When you read the comments (there are hundreds), Vancouver comes up repeatedly.
RJ Belwalkar
Calgary 2 days ago
Vancouver, Canada is a prime example of how foreign money has changed a city. Money from mainland China and HK has been pumped into developing and selling luxury high rise projects for more than a decade now. In addition, the fact that most of these units have remained and continue to remain unoccupied does not concern city officials in the least. As long as the property tax bills keep getting paid no one gives a shhh…
obert
southern california2 days ago
Very similar to foreign ownership that is being seen in Vancouver where real estate prices have surged without link to fundamental economics largely suspected to be from foreign investment. The government states they don’t track ownership so there is no official data. However, the volume of unoccupied homes suggest foreign ownership. Would not be surprised to see a similar vein of reasons for real estate prices in hot spots around the world that are permissive to ownership with no questions asked.
The series continues this week with profiles of individual buyers of a high-profile condo in the Time-Warner Center.
Global money? well occam’s razor!
So the false meme that hundreds of Vancouver condos are unoccupied continues to spread. The only data show it’s rare, existing in only a few buildings downtown. Many super high end condos are often unoccupied, because they are owned by people who have multiple residences, and live in each for a few months of the year.
Significant numbers of condos ARE owned by foreigners, because they are MARKETED in foreign countries. Overwhelmingly, they are rented at market rates, forming a critical part of the housing market, because almost no rental housing is being built.
If we want to complain about foreign ownership, why are we silent about Canadian snowbirds owning homes in Phoenix, which are occupied only for the winter?
If you don’t believe the statistics coming from local experts like Andy Yan, perhaps you should try talking to an honest local realtor about the scope of the problem. Certainly many will tell you off the record about the true numbers. Statscan, already hobbled by the Harper Government, or the CMHC do not come close to capturing the true data.
Nothing wrong with foreign ownership. Just tax them FAR MORE.
Land transfer taxes ought to be 1% per $1M going to 15%. 2% is far too low. Both the UK and Hongkong have such 15% taxes.
Property taxes in Vancouver should also be doubled, with the increase being rebated to BC residents that pay income taxes as many foreigners or new residents pay little or no income taxes here yet use education, transportation, police or healthcare services.
==> The tax mix to BC has to shift away from income taxes or PST to property taxes.
A grave oversight in the current transportation (allegedly decongestion) tax debate !
Yes, nothing wrong with a small section of local people profiting indirectly, to the detriment of everyone else, off the incredibly damaging crime perpetuated by the likes of the people described in the article. Poisoning a river in Africa that is used for drinking water with arsenic slag and not bothering to clean it up or inform anyone? Here’s a penthouse suite with all the bells and whistles. Warehousing workers in deplorable conditions? You’ll probably want something extra spacious and luxurious for you and the missus then! Crime is fine, as long as it’s taxed, because the people getting really screwed… Haha, they don’t have enough money to matter anyways. Wealth is it’s own amnesty, isn’t it? Child prostitution rings, drug cartels, who cares as long as the rich are getting richer. They can just buy better alarms and riot insurance, right Thomas?
I am open to suggestion how to enforce it. Not every foreigner buying real estate in Vancouver is a crook, perhaps only a few.
Monet swaps around the globe constantly, and it is very hard to enforce where it comes from. I am not suggesting we should not enforce illegal money; what I am saying is that foreign money that is parked here for real estate needs to be taxed FAR MORE for the benefits of BC residents. Income taxes are too high and property taxes are too low as many foreigners or even immigrants with money buy very high end properties but but little to no income taxes, yet use free (or heavily subsidized) services: healthcare, schooling, policing, streets, …
None of this is accidental though, Thomas. Don’t you remember one of reasons for the HST was to encourage foreign investment. It has been the argument for many policies which did not serve the people who lived here, as though foreign investment on it’s own is going to help your average bear working in a non-real estate/non trade industry.
People in the construction trade benefit even if condo stays vacant. GST is levied on goods and services. As such an HST would have helped BC as the current PST doesn’t tax services.
As stated property taxes are far too low to pay for all the required infrastructure: more schools, pools, transit, parks, roads , police , healthcare.
MetroVan mayors have lied to voters or swept this inconvenient truth under the carpet to get re-elected. Income taxes and PST are insufficient to pay or all this extra infrastructure.
Expenses pn the MetroVan level, primarily salaries, have also risen excessively over the last decade or so.
With modest savings here, higher land transfer taxes , higher propert taxes and an across the board parking fee increase all the necessary money could be found to invest billions into transit .
However the leadership is very weak catering to public sector unions and to a repeat of lies that the status quo in property development, and its taxation, as well as cheap car use, is sustainable .
You mention property taxes. Consider that commercial property taxes are extraordinarily high, though. I worked in a building in kits, two stories, five small businesses – not a large building at all, sort of like a small commercial walk up, built in 1960. A box. Property taxes were a hair shy of $100,00 per year when I left, and have likely surpassed that now. That’s one very average building. Everyone is paying more every year, yet it’s never enough. Look at what the liberals have done to healthcare and education, (in favour of …???) and still, never enough. So where does it go? And don’t say wages as the increase of revenue in property tax would certainly outweigh salaries and benefits.
I was referring to residential property taxes, not commercial. Indeed commercial is far too buy. Wages in the public sector have increased, excessively so, over private sector wages. BC is not competitive as taxes are too high, primarily due to excessive regulations and grossly excessive public sector wages & benefits and overstaffing instead of outsourcing.
Liberals are trying to correct the NDP misdeeds from the 1990’s but they can go only so far before the handout mentality kicks in again. As we see in Greece, the population is not the best leader of sound finances.
Residential investment is where Vancouver excels at, as it is so beautiful, seawall, bike paths, Stanley park, hiking & skiing nearby, decent schools and universities .. all reasonably priced (but under taxed).
Where else in the world can you go skiing in the morning, sailing in the afternoon and listening to an opera in the evening ? That is Vancouver in a nutshell: a resort town. A place to work from, to create money elsewhere. That is why so many come here, with money usually as otherwise it is tough to enjoy it fully, and why so many young people struggle due to excessive spending by the bureaucracy. MetroVan is a mini-EU: overgoverned, over regulated, far too high a taxation level, far too many administrators, far too few companies and workers to pay for it all.
I didn’t come here, Thomas. The liberals have doubled the deficit, sold off our assets and destroyed institutions meant to serve British Columbians. Fourteen years, Thomas. What about revenues from resource industries? Corporate tax? We sure don’t see much of those these days, do we? And you seriously think it is public sector wages… haven’t we learned that privatizing doesn’t save us money?