The problem is that there are fixed costs associated with building a unit of housing - city approval fees, construction costs, land - which are more or less independent of what kind of housing you're building and how 'luxury' it is. So there is a floor on the cost of housing in any given location. Then you have to factor in lenders and their requirements - how much interest they'll charge and what % of the project cost they'll lend you. Since lenders almost never will lend 100% of the project cost you need equity investors too, and they generally have expected project returns. Of course you can find non-profit entities at all these layers who will help you refuce costs it's hard to out together a project in a major city that is anything less than expensive these days.
Because the margins in a different city are 19%, or some entirely different class of investment now has better risk-adjusted returns so the funding falls through.
Can they easily enough move between cities that they could leave a 17% city to chase 19% margins?
you could have different margins and wildly different risk factors, and investment groups will go with the lower risk choice