More backlash from London’s empty towers

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By Leith van Onselen

I wrote yesterday how the new mayor of London, Sadiq Khan, had spoken-out about foreign investors using homes in London as “gold bricks for investment” following an investigation which found that the UK’s tallest residential skyscraper is now more than 60% foreign-owned and is under-occupied.

Now The Guardian’s Simon Jenkins has followed-up with a piece claiming that London’s empty high-rise is a mark of corruption:

Now we know. The glitzy 50-storey tower that looms over London’s Vauxhall and Pimlico is, as the Guardian revealed yesterday, just a stack of bank deposits. Once dubbed Prescott Tower, after the minister who approved it against all advice, it is virtually empty.

At night, vulgar lighting more suited to a casino cannot conceal the fact that its interior is dark, owned by absent Russians, Nigerians and Chinese. It makes no more contribution to London than a gold bar in a bank vault, but is far more prominent, a great smudge of tainted wealth on the city’s horizon…

In London, property is the most potent lobby…

There was no published plan for the drastic surgery being inflicted on London’s appearance. No limit was set to the towers’ location or height. No one took care of their appearance or bulk, their civic significance or their role in the life of the capital. Some 80% of the approvals were for luxury flats, chiefly marketed as speculations in east Asia…

This bubble simply has to burst. The waste of building resources, energy and space, the sheer market-wrecking bad planning, beggars belief…

In London, as the Guardian shows, these buildings have nothing to do with housing supply, let alone low-cost supply… They are the product of speculative flows of often “dodgy” cash, seeking an unregulated property market that asks no questions and seeks a quick profit. That is all…

Replace “London” with “Melbourne”, and “80% of the approvals were for luxury flats” with “80% of the approvals were for shoe-box apartments” and the article would make nearly as much sense.

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Again, if you have not done so already, make sure that you check-out the below video from Four Corner’s recent Home Truth’s special report, featuring Prosper Australia president, Catherine Cashmore, taking reporter Ben Knight for a tour through largely vacant apartment blocks in Melbourne’s CBD where, at 8pm on a Tuesday night, the lights are off and nobody’s home:

Former Victorian Premier Jeff Kennett also makes an appearance in the video, slamming the high-rise dog boxes proliferating through Melbourne:

“We are still building units that, to be quite honest, you wouldn’t put your dog in. I mean, some of these one bedroom vertical fridges are appalling. And I couldn’t imagine anything worse”…

“I think we are in for a crunch, there’s no doubt about it”…

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.