When I lived in Boston, there were some very nice high end places, but global capital wasn’t using Boston residential real estate as a piggy bank. Things, apparently, have changed (boldface mine):
The bottom 24 floors of One Dalton will be a 215-room Four Seasons hotel. Rising from the 25th floor will be 160 luxury condominiums, with an average cost per unit of $6 million. The penthouse will go on the market for a Boston record-breaking $40 million.
The future inhabitants of One Dalton will, Boston Magazine gushes, “enjoy a slew of ultra-luxe building amenities, too. The golf simulation room may come in handy on rainy days, not to mention the private theater, salon, health club, and spa.”
One Dalton is only the latest “swanktuary” constructed over the last decade. It joins Millennium Place and Millennium Tower, the two Ritz Carlton residences on Avery Street, and Twenty-Two Liberty place, together adding over 1,100 units of housing for the global 1 percent.
These buildings offer unprecedented luxury and we would be smart to tax them as such, with a high-end real estate transfer tax that could be used to help Boston deal with the economic inequality that’s made their construction possible in the first place….
Think of them as elegant piggy banks. They’re part of a global hidden wealth infrastructure, a mechanism to hide wealth and mask ownership to avoid taxation, legalities, and oversight.
A high percentage of these housing units will sit empty or rarely occupied. In the Millennium Tower, for example, only 25 percent of units claim Boston’s residential property exemption, declaring the property their principal residence.
A glance at the Boston Assessor’s report for Millennium Tower reveals an ample number of shell corporations masking the actual owners — perhaps absentee investors from Wall Street, Russia, or China. The property-owning entity may be incorporated in Bermuda, controlled by a trust registered in Panama, and funded from a Cayman Islands bank account.
Boston could do worse than taxing the value above $1 million for non-primary residences at 20%. Not only could Boston use the money, but it might put some of these apartments back onto the market. By the way, this is what a bubble looks like before it pops…