Rana Dasgupta on urban life and the super-prime housing market

Text by Rana Dasgupta

Illustrations by Olivia Meier

I recently went to a stand-up comedy performance in a tiny theatre on the sixth floor of a commercial building in Manhattan. The theatre was run by a magnetic actress-director who slept in the same space – in a fairy-lit corner closed off by a curtain – and who managed to keep it going by renting it out during the day to media-training workshops. Her theatre brought together a community of comedians, performance artists and Shakespeare-quoters who lionised her for its unlikely persistence.

I could not help feeling this charismatic impresario was a refugee from another city – one that used to stand on the same site and carry the same name, but which was declared obsolete years ago and replaced.

What might have been thought to be a paradox of our era – that as business processes have become more independent of location than ever before, the economic and cultural dominance of a few “global cities” has only increased – was shown by sociologist Saskia Sassen not to be so. The global dispersal of corporations, she argued, only expanded their headquarters’ dependency on complex managerial and financing functions that worked best when “agglomerated” in major command centres. “Business networks,” she wrote, “benefit from agglomeration economies and hence thrive in cities even today when simultaneous global communication is possible… This dynamic of simultaneous geographic dispersal and concentration is one of the key elements in the organisational architecture of the global economic system.”1

Over the past three decades, and in ways that are well known, the managerial class that has gathered in New York, London, Silicon Valley, Singapore and other such hubs has developed a radical programme to re-engineer the economic and political system that preceded this “global” era. It has expatriated routine jobs to places where costs and bargaining power are lower; at the same time it has implemented technological changes that have made nearly all work “routine”, so diminishing everywhere the majority’s claim on wealth creation. While entirely new media and networking industries have sprung up as if out of nothing, so producing dazzling concentrations of wealth, information technology has also enabled the development of a complex new range of financial products, almost entirely autonomous from real-world supply and demand, which have substantially enhanced the power of professional financiers. The innovative ingenuity of the global managerial class has extended also to tax practices: it has built a sophisticated offshore financial system that is home to trillions of dollars of untaxed corporate and private wealth, so accelerating the impoverishment of nation-states, and further uncoupling contemporary wealth from the “classical” equation of money, states and citizenship which, in the West at least, is still instinctive to all but a dissident few.

The ascendancy of this class has had equally transformative effects on cities. Attracting and pleasing it, in fact, has been a primary objective of city authorities all around the world, who have wished to capture for themselves some of its almost alchemical power. This has resulted in a curious homogenisation of city landscapes everywhere. All major cities have seen their previous living systems sidelined in favour of a now-banal infrastructure of “luxury” offices, apartments and retail. Not only the buildings in which all this is accommodated, but also the clothes, food, grooming, fashion accessories, physical exercise and other things essential to the work and lifestyle for which it exists, are supplied everywhere by the same global companies, such that major cities resemble each other far more than they resemble the rest of the national entity in which they happen to lie.

We see the decline, therefore, of that 19th- and 20th-century story of wide-eyed provincials journeying to the metropolis to “make it”. The Bildungsroman told that story: of the young men – usually – who set out for the capital with no assets beyond 
their own character and ambition, who encountered in its streets all the exhilaration and horror of modern life, and who finally were ushered into the position for which their mettle had always prepared them, at the centre of the nation’s power and money networks.2 The metropolis, in this sense, was the summary of the national character: it gathered in all national experience – including that of the land and the seasons – and turned it into modern energy. It is a fond and partial imagining, but what is true is that the sense of place and of national character was powerful in large cities until the 1970s even the most worldly could still be stunned when travelling from London or Paris to New York by the foreignness of what they discovered. But such cities do not today “summarise” – or even much quote – their national hinterlands: they operate within a quite separate economy of money and experience, and they open onto each other rather than onto their own geographical vicinity.

All this we know instinctively because it is the story of our lifetimes and we have had years to understand it. What we have not yet come to terms with so well is a related but separate development in contemporary cities: the displacement of so many previously crucial city functions by the single function of real estate. This is not an automatic corollary of the above. After all, there were wealthy people long before the present era of globalisation, and their need for prestigious urban locales did not seem to require the dispossession or mass flight of so many less financially powerful communities (from teachers to artists to artisans) nor the eclipse of so many urban institutions (from religious buildings to hospitals, petrol stations to theatres) by a homogeneous landscape of offices, boutiques and apartment blocks. This is a new development, and represents, indeed, a novel idea of the metropolis, according to which it is given over to finance and unable to offer that great range of activity and experience we had previously come to expect. This is a consequence not merely of 
globalisation but of new dynamics of wealth.

From the 1990s onwards, the world’s richest 10 per cent increased their hold on wealth considerably at the expense of the remaining 90 per cent, the top one per cent pulled away from this 10 per cent, and the top 0.1 per cent from this one per cent. Some of this could be explained by new technological innovation, which could produce vast monopolies with outlays of capital and labour that were trivial in comparison to those expended by earlier industrial giants. This allowed the founders to keep control of significant proportions of the market value, so creating several fortunes of a scale, when compared to GDP, not seen since Rockefeller. But lucrative as they could be, technology investments were highly volatile – precisely because the effort required to build industrial infrastructure in a virtual age was so trivial. Especially after the dot-com bust of 2000, therefore, there was an increasingly intense demand for a “real-world” hedge.

Other forms of wealth were looking to diversify in a similar way. Many of the emerging-world rich, for instance, saw international real-estate investments as a way of hedging against the volatility of their own currencies and political situations. Credit Suisse estimated this year that Chinese buyers will put $44 billion into Australian real estate over the next seven years. It is Chinese wealth, too, that has generated the remarkable property prices in Vancouver, which, currently at 12 times the average income, are even further out of the reach of locals than those in London or New York.

“Vancouver isn’t an obvious superstar. It’s not home to a major industry – as 
New York and London are to finance, or San Francisco to tech – and it doesn’t have the cultural cachet of Paris or Milan. Instead, Vancouver’s appeal consists of comfort and security, making it… a ‘hedge city’. [J]ust because prices look out of whack doesn’t necessarily mean there’s a bubble. Instead, wealthy foreigners are rationally overpaying, in order to protect themselves against risk at home.” 3

All this new demand for real-estate assets came just at the time when the competition it might have faced was weakened in many cities of the world. Many urban working-class communities in the West had been politically and morally debilitated by the consequences of the expatriation of industrial labour, and by the 2000s it was comparatively easy to edge them out of inner-city areas. At the same time, many jobs that formerly sustained middle-class families had been re-engineered into flexible work incompatible with large mortgage commitments, so that middle-class home buyers presented a flimsier force than once they had. In addition, a new ideological impatience with all those 20th-century innovations that had sustained non-elite communities in the city – from libraries to homeless shelters, rent controls to zoning laws – inflamed city authorities everywhere, which now came to define success as the ability to attract large-scale finance. All this released urban land from a large variety of previous uses and made it available to investors.

Real-estate investments generated quick returns in these years for reasons that are in part obvious. The “agglomeration” of corporate-command functions that we noted above, for instance, was creating great real-estate pressures in hub cities. Since the congregating capitalist and managerial class had buying power far greater than most locals, and since its members tended to compete furiously among themselves for status, the price of prime residential real estate spiralled up. In London, whose 18th-century aristocrats seemed to have built their mansions in readiness for just this moment, there were frequent headlines of properties going for more than £100 million to Russian, Middle Eastern and Indian billionaires (these last derived a particular post-colonial enjoyment out of such purchases, as did their compatriots reading those headlines back home). But the tide was larger and more anonymous than this. Among the 250,000 French in London in 2011, for instance, the majority of whom moved there after European integration in 1993, 26 per cent lived in three upscale boroughs: Kensington & Chelsea, Westminster, and Hammersmith & Fulham. Since urban real estate is basically a finite commodity, the rise in prices spread out everywhere as people in all income brackets were forced to look further afield – and to pay more – for places to live. Cambridge and Oxford, which offered medieval serenity an hour from London, were both consumed, not only by spiralling prices, but also by a frenzy of upscale-apartment building.

But it would be a mistake to believe that the rise in the value of urban real estate was due merely to the rich people’s real need for places to live. The fact was that the wave of investment capital that was directed into real-estate speculation from the 1990s onwards – a trend that accelerated after 2000 and then again after the crash of 2008 – produced its own inflationary dynamics that strained the relationship between “real” demand and pricing almost to breaking point. It was this wave, above all, that re-made urban landscapes and cultures – not just in “global cities” but wherever capital could find a foothold to create accelerated real-estate-market dynamics.

Until the 1990s, it was unusual for large investment funds to put money directly into property, and their main exposure to property markets was through the financing of third-party property deals. From the late 1990s, however, high-net-worth individuals, investment banks, private-equity firms and the like began to see directly owned urban land as the alternative asset class of choice. Microsoft co-founder Paul Allen’s ever more extensive investments in Seattle real estate were a conspicuous instance of this (as was’s 2012 decision to spend $1.2 billion on some of his buildings; the company’s switch from renting to owning its headquarters reflected a new emphasis on real estate even as a category of internet companies’ wealth). So were the new private-equity real-estate funds. The private-equity firm the Carlyle Group, for instance, set up its US real-estate fund in 1997, with Europe and Asia funds following in the wake of the dot-com bust: some 10 per cent of its $150 billion fund is now invested directly in properties, especially commercial properties: prime office buildings, hotels, managed-care facilities and so on. More than 25 per cent of the $272 billion managed by Blackstone, the world’s largest private-equity firm, is held in real estate. Both these companies increased their holdings significantly after the 2008 crash, buying when prices were at rock bottom and snapping up foreclosed homes (which is just one way that recent financial events have made possible a transfer of urban power to the very wealthiest individuals and organisations). Right now this trend is at its highest point: in 2013, US private investors, including high-net-worth individuals, bought nearly $150 billion worth of American commercial properties alone, up 18 per cent from the previous year.4

This money punctured holes in the centres of cities as far afield as Nashville and Bangalore, holes from which sprang great ziggurats comprising hotels, expensive gyms and luxury boutiques (investment firms often chose names like Cerberus and Vulcan, which only added to the sense of underworld invasion). These new developments had a particular global-Mediterranean look of cafés and parasols, but their hard edges and ubiquitous warnings to miscreants dispelled any misapprehensions of sunny insouciance. Piazza chic was the euphemism of private capital, and, like money, it had altered little with climate. It was reproduced even in places where the class of people who might benefit from its global brands and $5 coffees was absurdly small, even in ecologies where glass towers, lawns and water features were utterly inappropriate, even in societies where the security gates and guards around such installations made it impossible to mouth Western democratic platitudes about who they existed for.

But even in the heartlands of global capital, one had to wonder how the spread of such installations could be sustained in these times when most people could no longer afford their own house. In the UK, after all, the number of owner-occupied households remained steady at 15 million between 2001 and 2011; close to 100 per cent of the 1.6 million households inaugurated during that decade rented from private landlords. This added up to the UK’s first drop in home ownership in a century.5 A similar tipping point was reached in the US in 2014.6 And yet the fact that most people were losing their hold on assets only fed the bonanza further. A greater proportion of property was financially productive because more people were renting; this increasing majority paid an ever-wealthier minority for the privilege of living in cities – and so there was ever more investment capital. The rise in the value of urban land seemed to become a natural law as the city forgot itself and became a mere speculation horizon.

The meaning of the metropolis changed. Its mystique no longer derived from the range of experiences it could offer – which was shrinking under the glare of security cameras – but rather from the fact that it was now a manifestation of the contemporary world’s most tremendous and devastating energy: the genius of 21st-century business and financial elites. As real estate came to represent a greater and greater share of wealth, and rent from real estate a greater share of income, the city came to look like a real-world representation of the universal, abstract logic – for everything else, too, had become property and rent. This was the amazing innovation, after all, of the technology age. The products sold in vast numbers by industrial-era giants like General Motors each individually required intensive labour, raw materials and plant; new technology firms, on the other hand, built only one product, which they then rented out innumerable times. These rental incomes did not need to be shared with large numbers of skilled workers (the dark genius of Facebook was that it managed to co-opt the activities people did anyway – making friends, contacting loved ones – and turned them into billions of hours of unpaid labour from which the corporation derived rental income), and often they were hardly shared with national exchequers. (In the year it bought its Seattle headquarters,, whose monopoly dispossessed countless smaller bookstore owners and their employees, made £4.2 billion in the UK; because these revenues were registered in Luxembourg, however, it paid only £2.4 million in UK taxes, which was less than government grants made to the company).7 Property interests reigned supreme: taxes, salaries and all the rest were impositions of the past.

It was the same in every domain. The power of celebrity models, sports stars and artists, for instance, came not just from the fact that these individuals were attractive or talented; it arose because they had managed to elude the logic that was claiming everyone else, which was the routinisation of their function. The readers of fashion magazines might themselves be suffering the ignominy of having less and less that was unique to offer the global economy, but the tennis stars and actresses in those pages had the opposite fate: their unique physical function could not be automated by computers, and its value was rising inexorably as “rental” markets became global.

In the context of 20th-century idealism, these were cynical and elitist developments. But they were also dynamic and dazzling. The withering systems and institutions of the 20th century were very worthy, perhaps, but they could no longer compete for erotic edge with the dynamism of the global elite. The fact that big cities precisely reproduced the form of this dynamism, therefore, did little to discredit them. Cities were not about what was just, but what was cool. By dramatising the mercurial power of global elites they allowed everyone to feel its pulse, and feel themselves buoyed up by it – even when, in “real” life, it pressed them down.

You could see it in the new literature of the city. In the very “cool” TV drama Girls, for instance, New York 20-somethings no longer dreamed of good jobs, because such things did not exist. They did jobs, certainly – they worked in cafés and wrote for magazines – but all of them were holding out for the day they might grow up and own “real estate”: a novel, a pop song or the like. The discovery that one of their friends had suddenly become wealthy from the success of an app he had written only increased the hope that something similar might happen to them. The odds might be those of a lottery, but that was the modern economy: the days were over when you came out of college, joined a corporation on a subsistence-level salary and, by dint of hard work alone, rose through the ranks to claim a comfortable living for a large family. What they saw in their immediate vicinity was a ubiquitous, high-priced “hipster” culture, which crowed the achievement of those creative workers who had survived the informalisation of their jobs by becoming small-scale property developers and business owners themselves – and whose restaurants and design stores often invited customers to supply their own, unpaid, labour under the guise of “fun”. Salaries had everywhere lost their aura: glamour belonged to property, even for those who had nothing. Wealth was back, not only in the economy but also in the realm of social meaning; it was the wealth of the few rather than the labour of the many that supplied the social charge, just as it had in the 19th century. Girls did not criticise the desolate middle-class economy it portrayed. It rather celebrated that eternal daydream of the masses: I might be an aristocrat, too.

The irony was that the people who played its “girls” were already, in some sense, aristocrats. Though Girls took on the tropes of the Bildungsroman – its lead character arrived in New York from East Lansing, Michigan, her provincially minded parents having cut off her money supply, and she lived in the big city with nothing but her dreams – the real-life story of Lena Dunham, who not only played the lead but also wrote and directed the show, was rather different. She was the daughter of two prominent, and propertied, figures of New York’s 1970s art scene, while her co-stars were respectively daughters of a pop musician, a TV news anchor and a world-famous theatre and film writer. Dunham herself fulfilled all the dreams of fame and wealth that her fictional character never could, but she did so, not as an outsider, but as someone whose metropolitan assets placed her already in the inner circle. Though urban employment opportunities for ordinary people were growing in areas – such as chauffeuring, private nursing and domestic service – that made many think back to the era of Jane Austen, and though 19th-century ideas about the equivalence of wealth and virtue, and of poverty and immorality, were making a comeback,8 the wide-eyed, empty-pocketed provincial arrival no longer carried the heroic, transformative charge (s)he had in the Bildungsroman of that century. Even in the imagination, the city was sealed now, and mere human character could do nothing against its grander, financial logic.

Property and rent now dominate the ethos of the world’s cities to an extent that has severely narrowed their philosophical possibility. Supposedly intellectual spaces such as museums are thoroughly incorporated into the real-estate takeover – or else they are closing – and artists have fewer and fewer measures of their own success aside from their work’s viability as a market asset. It is natural, given the singular harmony of all these individual processes, that great metropolitan centres are becoming diminished as places of poetry, philosophy and politics – and perhaps we should no longer expect from them the kind of imaginative leaps we used to. It is unlikely, for instance, that the political breakthroughs we need, which must involve the relativisation of the rule of property, can come from those very places where people are the most hypnotised by it. It is unlikely that places so childishly delighted by the reorganisation of all experience into markets will be able to see what is so apparent elsewhere: that our system does not require much of the global population for its successful working, and that the survival of this massive human residue must be instituted – it used to be obvious to all! – outside the logic of markets. Places so fundamentalist in their economic thinking are probably not the ones to help us see our present arrangements in the new ways we need: to see for instance that the structural underemployment of much of the rich world might represent a stupendous resource, if only we could think about human time and energy in other ways.

But the monoculture that is being established in cities makes them vulnerable also to infection from outside. Perhaps the “new” will come from the global hinterland. From places both more futuristic and historically aware than those living in flattened property-time. Perhaps it will come from the ranks of the refugees, wherever they finally end up. §

Rana Dasgupta is the author of Capital: A Portrait of Twenty-First Century Delhi.

With many thanks to Sunila Kale and Lindsay Brown, whose thoughts were invaluable for this essay.


1 Saskia Sassen, “The Global City: Introducing a Concept,” Brown Journal of World Affairs, Vol. 2 No. 5 (2005).

2 I am thinking, among others, of the character of Eugène de Rastignac as he appears in Balzac’s Le Père Goriot and Les Illusions Perdues.

3 “Real Estate Goes Global,” The New Yorker, 26 May 2014.

4 “Wealthy Families See Attractive Opportunities in Commercial Real Estate,”, 25 March 2014. (

5 “Home Ownership Falls for the First Time in a Century,” Office of National Statistics, 2012. (

6 “US Home Ownership Falls to the Lowest Since 1995,” Bloomberg News, 29 April 2014. (

7 “Amazon received more money from UK grants than it paid in corporation tax,” The Daily Telegraph, 15 May 2013.

8 A fascinating architectural instance: “NYC Approves Apartment Building With Separate Entrance for Poor People,”, 21 July 2014. (