I don’t think the idea is that there is a bubble or that there will be a pop. The OP is an argument against the theory that new units are speculative investment

I don’t think the idea is that there is a bubble or that there will be a pop. The OP is an argument against the theory that new units are speculative investments that lie empty. The suggestion is that if that were the case then there would eventually be enough supply that prices would fall for new or existing stock. That feels appealing to me. It also feels reasonable that converting existing buildings to have more units would be beneficial for a city’s poorer residents in general even if it’s bad for those who are evicted: the people moving into the newer more expensive units would only increase demand (and therefore price) for the other older units if new units weren’t available, pushing up prices for existing residents. I’m unconvinced by the idea that the rich will decide to move to a city based on whether or not there is a pencil tower. A counter argument I find compelling is that if people are buying property as a way of laundering money or stashing cash overseas then they may not care so much about the quality of the investment and that this breaks some of the assumptions about market efficiency.