I think we need more cities: Saskia Sassen
by G. Sampath – February 5, 2017
Saskia Sassen explains what the stunning levels of private investment in urban real estate have meant for urban life.
What would you consider to be the single most important trend in urban real estate markets around the world?
One clear trend is a vast and very visible expansion of the luxury zone, for fancy offices and fancy residences, accompanied by an almost invisible expulsion of the working classes and modest middle class families from locations where they may have lived for several generations.
What is driving this push towards development of luxury zones?
Private investment. In fact, the levels of investment in urban real estate are quite stunning. The top 100 cities worldwide that I studied together had investors acquiring existing properties (not new construction) for a total of $600 billion from mid-2013 to mid-2014. This went up to over $1 trillion for the next cycle, mid-2014 to mid-2015. What’s happening here is that a building is also functioning as a real estate asset, a deeply financialised item. If you take all the real estate that has been financialised worldwide, according to Savills, a real estate firm, it amounts to $217 trillion, and that is more than the global GDP.
What does this transformation of living spaces into financial assets mean for the nature of the city?
Each city is different. But we see two patterns. One is a massive expulsion of the modest middle classes out of residential areas that had long been theirs. They are displaced to more distant parts of the city, and they do not deserve this, for they had worked hard to get a reasonable life in a nice part of the city not too far away from their jobs.
Secondly, some of these cities become monocultures. For instance, Lower Manhattan years ago was full of artists from all over the world. I used to be a performance artist and it was a great time. Today, much of Manhattan looks like a sort of monoculture of luxury high-rise towers. And many of them are half empty. With all this added density, it actually deurbanises the city. We used to think that density was enough to make a place a city, but not any more.
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