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Are city centre apartment towers the “slums of the future”?

One of the most persistent and widespread criticisms of city centre apartment towers is they’ll inevitably be “the slums of tomorrow”. But does the claim hold up on closer examination?

Is this proposed building destined to be a slum? Victoria One - recently approved apartment building in Melbourne. 629 apartments, 75 storeys. Architect: Elenberg Fraser

Melbourne’s hot apartment market means the city is the focus of claims that all those high-rise apartment towers in the CBD will be the slums of the future.

These sorts of dire predictions are made on social media, or sometimes by journalists like Fairfax associate editor Shane Green in this oped on the weekend. But here’s the Lord Mayor of the City of Melbourne, Robert Doyle, two weeks ago:

…you don’t want to be left with housing stock in 10 years that no one wants … You don’t want to be building the slums of tomorrow.

The idea of “slums in the sky” is highly charged and emotive. I haven’t seen anyone question the proposition before but it’s the sort of “end of all discussion” statement that really warrants close scrutiny.

Slums can be described in a number of ways, but two key attributes are the low economic capacity of residents and run-down buildings and infrastructure.

Places become slums because of wider economic changes. In developing countries it’s usually the result of large scale in-migration from country to city associated with industrialisation. Low income workers who can’t find proper housing “squat” where they can, usually on undeveloped land, and build makeshift shelters from whatever’s cheap and comes easily to hand.

In developed countries, the archetypal case is once-prosperous established areas that lose value as a result of wider structural changes e.g. Detroit. Those who can leave do so, but under-utilised buildings attract those on very low incomes. Their capacity to pay is limited, leading landlords to reduce expenditure on maintenance. Residents tend to lack political muscle, so both buildings and infrastructure deteriorate. (1)

So what is it about all those apartment towers going up in the centre of Melbourne that evidently predetermines they’ll become vertical slums? Some say it’s because the apartments are too small and too dark. According to this report,

critics of Melbourne’s tower frenzy are warning that apartment blocks are being built too close together, shading each other and creating future slums in the sky.

Yet whatever their shortcomings are compared to housing options in other parts of the city, it doesn’t appear to have led buyers and renters to abandon city centre apartment towers. In fact the demand has never been higher; what do we know about future residents that suggests they’d be so different?

The people who’re choosing to buy or rent city centre apartments right now aren’t at the very bottom end of the income scale. Even the smallest studios and one bedroom apartments in Melbourne start round $350,000 (median $468,000) plus ongoing body corporate fees. Many residents are students or young professionals, but they tend to have high lifetime earning potential.

As to what lies ahead, it doesn’t seem plausible that those who can afford it will abandon the city centre.

These apartment towers let resident live within the largest single concentration of jobs in the metropolitan area. After experiencing long-term decline, the CBD and the inner city have experienced strong growth in both jobs and population over the last 20 years.

Policy-makers and analysts are unanimous that the ongoing shift to a knowledge economy will continue to reinforce the benefits of density and the advantages of the CBD.

Earlier this month the Grattan Institute published a report pointing out that the CBDs of Sydney and Melbourne produced nearly “10 per cent of all economic activity in Australia, and triple the contribution of the entire agriculture sector”.

Many of the jobs in the CBD pay very well and those who hold them put a high value on their time. It’s likely there’ll be continuing demand for housing in locations that minimise travelling time, as there is in places like Manhattan.

City centre apartments will also continue to be sought after for the access they provide to the cultural, recreational and specialist services of the centre. There’s infrastructure too – for example, the public transport lines radiating from the CBD give access to the entire metropolitan area.

Nor is the small size of many apartments an inevitable reason they’ll become slums. In common with other Australian cities, one and two person households are expected to comprise the great majority of the projected increase in households over the next 30-40 years.

That suggests there’ll continue to be a ready market of small households who find the diminutive but affordable size of apartments an acceptable trade-off for the unique benefits of living in the city centre.

Moreover, the City of Melbourne’s draft Housing Strategy projects the municipality’s population will grow from 116,000 at present to 190,000 in 2031. That doesn’t sound like a place that’s going to be deserted by residents; indeed, small apartments in the centre with a low ecological footprint sound like a robust way to prepare for whatever the future might bring.

The buildings are new, so right now they’re in good condition. Some are happy to assume they’re jerry-built, but these towers are all constructed in compliance with the building regulations. Doubtless some buildings are better than others, but that sort of variability is true in other construction sectors too.

They’re not likely to fall apart from lack of maintenance either. That’s partly because they’ll continue to be occupied by residents who have the resources to (and are prepared to) pay for proper care.

It’s also partly because modern apartment towers aren’t owned by the single cold-hearted, venal landlord of slum folklore. They’re strata-titled, so each building has a collection of owners. They’re mostly investors but some are owner-occupiers.

They all have a common interest in protecting the value of their asset; the tax system in Australia ensures that housing is as much an investment decision as a shelter decision. Nor does maintenance fit the stereotype of the rapacious landlord; it’s a shared, managed responsibility and it’s regulated by the strata title law.

No one knows what the future will bring but from today’s perspective there’s no more reason to think those apartment towers will become slums than the detached houses of Toorak or the terraces of Fitzroy will. (2)

I know some people think many of these apartments are “dogboxes”. Whatever the merits of that view (see Does even storage in new apartments need to be regulated?), invoking the spectre of “vertical slums” is over the top. Like so much discussion about cities, that sort of over-wrought prediction is a politically intentioned statement, not a logical one.

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  1. Slums might have poor physical conditions but many also have robust economic and social networks. Indeed, slum clearance of the type that Robert Moses undertook in New York is usually criticised for destroying strong communities.
  2. Equally, there might well be benefits for those on low incomes if some currently well-heeled areas actually did become slums.

Victoria One, proposed apartment tower designed by Elenberg Fraser

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  • 1
    Aidan Stanger
    Posted July 28, 2014 at 1:10 am | Permalink

    There’s a third reason for slum formation: rent controls. But like the two others you’ve mentioned, there’s nodanger of it applying here.

  • 2
    Zebee Johnstone
    Posted July 28, 2014 at 2:09 pm | Permalink

    As always.. things are likely more complicated.

    I don’t know that the ones right in the CBD will become slums but I also don’t know they are ” all constructed in compliance with the building regulations”. In Sydney a few years ago there were some very high profile cases of large blocks being badly constructed (try fire walls that did not reach the ceiling) and “self certified” while the builder had set the strata agreement in such a way that the residents did not have a majority until the warranty period was over.

    The small block I live in was built in the early 80s. The quality of build, especially noise reduction (meaning wall thickness and ceiling design) is noticeable when I was comparing this place to ones built in the late 90s before buying.

    It also isn’t clear how many are owner occupied. The bigger the building it seems the fewer may be as they were block sold as investments to super funds and similar. I am unsure if an institution balances the outgoings with the capital gain potential in the same way an owner occupier or even solo investor does. Especially given that in 20 years the infrastructure in tall buildings such as lifts will get more expensive to maintain.

    Concrete cancer is happening to older large buildings.

  • 3
    Paddlefoot
    Posted July 28, 2014 at 8:34 pm | Permalink

    You said it – dogboxes. Built on a bubble. Learn from History.

  • 4
    kanooka
    Posted July 28, 2014 at 9:20 pm | Permalink

    There are very few places in the world that I have found large apartment developments aging well, by aging I mean over 40 years or more.

    While it’s true that some inner city buildings are well maintained and retain value there are far more in the suburbs centred around the CBD that have been allowed to become less than they once were. Maybe they don’t qualify as slums, however that’s only because as soon as they lose enough value another developer moves in to start again.

    I have seen this in the USA, Canada, the UK, and here in Australia, as for SE Asia many high-rises are slums as soon as they are built (but that’s another storey). Given how much space we have here it bewilders me as to why we fail to develop larger regional centres with traditional houses on family friendly blocks. Well planned modern cities can be created to be great places to live and work as well as being environmentally gentle.

    Ask any parent that has tried to raise a family in a high-rise how much they enjoyed it, then ask “how many families they knew managed to stay the entire childhood of their youngest”?

    We may be by nature clans-people, however we also need our own space.

  • 5
    Posted July 28, 2014 at 9:37 pm | Permalink

    It might also be worth reflecting on international experience. I live in Toronto which has had high rise apartment towers – condos, or condominiums – for several decades. Altho they’re too big and anonymous for me, they remain very popular around the lake as one would expect but also along the subway routes.

  • 6
    Jacob HSR
    Posted July 28, 2014 at 9:47 pm | Permalink

    A lot of slums in poor countries are illegal. Obviously the ones near the city centres. The land is so valuable that if there was a legitimate owner, wouldn’t the owner have sold the land to a developer years ago?

    A Forbes article on the gritty business of negotiating with slum dwellers to knock down the slums and building towers in their place:

    http://india.forbes.com/article/big-bet/how-omkar-cracked-the-messy-business-of-slum-redevelopment/32730/0

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