New Wealth Seeks a "Home": The Global Rise of the Hedge City
2015; Harvard International Relations Council; Volume: 36; Issue: 3 Linguagem: Inglês
ISSN
0739-1854
Autores Tópico(s)Housing, Finance, and Neoliberalism
ResumoVancouver is a city in flux. A stroll through one of its residential west-side neighborhoods reveals blocks and blocks of construction sites, for-sale signs, and ostentatious new mansions, often left vacant. The west coast Canadian city is North America's least affordable urban housing market. Local incomes and property prices are extremely out of sync--Vancouver has the median income of Reno (roughly 70,000 Canadian dollars) and the skyrocketing property prices of San Francisco (the average detached home on Vancouver's west side is valued at 1.8million Canadian dollars). Vancouver's imbalance may reek of a domestic housing bubble, particularly in the wake of the US real estate crash of 2007, but its story is quite different. The city's property prices have been inflated by massive foreign investment from mainland China. It has become a city, a safe financial haven for China's wealthiest investors. The Vancouver experience speaks not only to the globalization of the world's real estate market, but also to the political structure of China and other large countries, most notably Russia, that pair capitalism with authoritarianism. Real estate markets in Vancouver, as well as Sydney, London, Hong Kong, and Singapore have been transformed by Chinese and Russian money as investors seek to protect themselves against risk at home. What does the future hold for these hedge cities? And does this movement of capital represent a vote of no confidence in the stability of capitalist authoritarianism? Vancouver, at first glance, appears an odd choice of city for large-scale investment. The city of two million is Canada's third largest metropolitan area and consistently ranks amongst the top five cities in the world for livability and quality of life, but it lacks a major industry or the cultural significance that draws foreign capital to cities like San Francisco, New York, and London. By all accounts, Vancouver appeals to investors for more mundane reasons--the city is socially and politically stable, comfortable, and in close proximity to Asia. According to Vancouver urban planner Andy Yan, who coined the term city, Chinese investors are not on the lookout for the most profitable cities, but rather where they can park some of their cash and feel safe about it. After all, the security of capital in China is uncertain--economic freedoms abound, but the government maintains the power to expropriate property at will. Just last summer Chinese President Xi Jinping launched a massive anti-corruption campaign that some accused of targeting the assets of political competitors and wealthy critics of Beijing's elites. Chinese real estate purchases in Vancouver are not intended to produce enormous returns, but to hedge against crisis. In fact, Yan claims that the prospect of property investments losing value is not a major concern for Chinese buyers. Losses of 10 or 20 percent on foreign properties still beat losing everything at home. But hedge cities are not just about storing money. There are many locations and assets outside of China where capitalists could choose to stash their savings, but there is particular prestige and pragmatic benefit to owning a home in Vancouver and other hedge cities. Home ownership is a form of conspicuous consumption--owning an extravagant mansion in an exclusive neighborhood is a more visible display of wealth than a Swiss bank account or a safe of gold. Hedge cities tend to be places the ultra-rich in China and Russia are inclined to visit and even live. These individuals could afford to stay in the Four Seasons penthouse suite, but a permanent vacation home in a desirable city offers significantly more status. Not only that, but Chinese capitalists often follow their wealth to Vancouver, Sydney, and Singapore. They invest in residential properties because these allow them to split their lives between China and a foreign city. Vancouver's real estate boom is correlated with a steady stream of foreign immigration of a very globalized nature. …
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