The problem of 'ghost apartments' in capital cities

The problem of vacant properties, also known as ‘ghost apartments’, arises not only in Paris but in almost all of the most famous and sought-after capital cities in the world.

These spacious properties of several hundred square metres ideally located in attractive and exclusive districts of Manhattan, Miami, London or Singapore have become essential trophies to acquire for the newly rich. A symbol of social success, these apartments are also a wise and profitable investment.

However, by having a varied portfolio of properties across several cities, these wealthy owners hardly ever occupy them. A typical billionaire would therefore own an average of ten residences around the world according to the property consultancy Knight Frank.

Statistically speaking, if these properties are not lent to friends or family, they remain unoccupied on average 47 weeks per year – which is 90% of the time.

American magazine Newsweek reports that authorities are now starting to worry about these ‘ghost apartments’ because, although these luxury sales are good news for property professionals, they can also harm the local economy.

“When you convert an existing building by replacing small, affordable units with large luxury properties, this damages small businesses because there are fewer people living in the neighbourhood,” explains Mason Gaffney, an economist specialising in property taxation.

Nor should we forget that these large buyers are generally very aware of all the possibilities for tax optimisation and therefore contribute less to public finances than other taxpayers, for a comparable surface area.

To make matters worse, these luxury constructions or renovations increase rents for locals or even push them to move out to pay less, which lengthens commuting times.

In Asia, in Hong Kong or Singapore, authorities have therefore begun restricting access to property loans to reduce the flow of the largest transactions. In New York, a bill has been drafted to subject vacant luxury properties to progressive taxation. The tax would start at 0.5% for properties worth 5 million dollars and rise to 4% for those exceeding 20 million dollars.

Source: immobilier.lefigaro.fr and aucoeurdelimmo.fr