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Noting that there’s a desperate need for affordable housing in Iceland.
And yet? These.
Reminder: the cost margin between luxury & affordable is small.
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Reykjavik Is Being Swamped by Empty Luxury Flats - Bloomberg
(Non-apple: bloomberg.com/news/articles/… ) apple.news/AYSKUFa7LQE-WG…
The article itself refers to the architect building her own apartment in the building.
This is a fairly common dodge in real estate development: if you’re dodgy, you put all the nice stuff you want in your place, and cost out the price to all the others in the development.
It’s not technically illegal to do that. It’s just sketchy.

Same with building 38 other apartments to finance the designer’s. It’s a level of arrogance, to be sure. But not illegal.

But... hiring 1 artist to do an installation for a building? That’s a money laundering dodge.
This is true of anything that’s a single source: if a building specs out that the hardwood newel posts must come from a single workshop, or the floor tile HAS to come from a specific entity... be skeptical, because then there’s no chance of a competitive bid.
(Infamously spotted with Trump Tower Azerbaijan: LOTS was spec’ed to various single sources, which turned out to be Iranian Revolutionary Guard fronts. newyorker.com/magazine/2017/…)

Art can be a BIG dodge, because there is no actual competitive market.
And then we get the designer saying they can’t lower the price further, that they’re already losing money on the building?

REALLY?

You’re over half sold. This is real-estate dev 101, but the break-even is supposed to be between 40%-50% of the building.

Something smells funny.
It’s a Bloomberg article, so I’m neither expecting depth nor actual sources (Bloomberg are cheerleaders, not financial journalists engaging in critique) but... if I were Iceland, having barely survived a generation of fishermen thinking they could pwn the finance market...
... I’d be auditing that building and everything associated with it. Because there’s a lot of debt and envy left over from the crash. It gave them a taste of high stakes gambling, and that makes them easy to manipulate.
Because the other thing about money laundering? While it’s a losing game, it’s a losing game that generates its own sub-laundry.

Remember when we were talking about Jason Mendoza, his $100K of fake drug money & wanting to move to Tampa?

I used a gym as the single example. The gym takes in cash, pays out 75% of the cash as a check for “social media influencing” or “promotion”.

But the gym isn’t just doing this for Jason. They’re taking in $1000/week from 20 laundry clients. They’re paying $16K out, but...
... they have $4K they have to explain every week, which mounts up over a year. They can claim a bunch of fictitious clients, or massage services that never happen, until audit.

(I’m using deliberately small scale numbers here, because large numbers make our brains disconnect.)
So... that’s $200K, at a low level dodge. And let’s recall that the primary goal of money laundering is to get the money clean enough to buy real estate.

Funny, there’s been a shift in how apartment buildings are being built, and it enables a lot of cash purchases.
The advantage of balloon construction? You can buy the materials at any Big Box store, for cash. You can hire most of your labor there, too. Illegally. For cash.

And yet your investors still get a percentage of legal rent.

bloomberg.com/news/features/…
(Let’s not think too hard about how easily those buildings burn. They’re wood & plastic, after all. If you must live in one? MAX OUT your renter’s insurance and make sure you run fire drills & keep your most important stuff in a safe deposit box or off-site storage.)
Here’s the thing: behaviorally? It makes sense to build dense urban housing out of cheap materials. And to finance those buildings through smaller investment, where each investor puts in a mid 6 figure & gets back 1-3% over 100 months.

Money laundry exploits good practice.
You can’t see the money laundry aspect without a really good audit and strong oversight of the building process, which takes good government.

And we’ve spent 35 years being relentlessly told that good government cannot exist.

Do we need a startup for crowd-auditing?
It does sound ludicrous when phrased that way.

The link between real estate & money laundering is old & well established. Not all real estate is a laundry front, but we (at least in the places with property law derived from English Common law) make our tax law laundry friendly.
Look at Kushner’s depreciation that let him get away with paying no income tax.

Truly: this is perfectly legal & massively exploited & happens at all levels. This is Rentier 101.

You can learn how it works by taking an H&R Block tax prep class.

vanityfair.com/news/2018/10/j…
But back to that Iceland property?

Every building, whether luxury flats or permanently affordable, needs the same stuff: foundation that meets local codes, piping/electrical/low voltage [phone/cable] conduits, walls, roof.

There’s no such thing as a Luxury 2x4 or shingle.
And though audiophiles will swear on a stack of gold plated monster cables that yes, indeed there is such a thing as high end wires...

No.

What divides a luxury building from an affordable one is about 10%, in finish details. Which carpet, chrome or brushed stainless faucets.
And a whack of a lot of marketing.

Because the marketing sets the expectation of who one’s neighbors will be, and even in places with a high expectation of an egalitarian society, like Iceland’s 350K population, where 90% of the population is closely related.
It depends where you are, but there’s always behavioral and expectational signaling in real estate marketing.

(And so much branding and puffery. Don’t get me started on the prosumer range of appliances.)

To end: be skeptical of anyone feeding you a “poor little rich kid” line.
Self-promo:
I write fiction about building revolutions. Amidst the spies & soldiers, the princess lawyers, and the assassinations, there’s a deep thread about corruption & abuse of power.

Kingdom at Amazon: amazon.com/dp/B07GTSXB4P
Free at Smashwords: smashwords.com/books/view/891…
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