INTA is holding a networking event at the WUF 9, themed "Coordination, cooperation and planning to regulate the financialization of the city". It will be held on 12 February 2018, 9h-11h, Kuala Lumpur, Convention Center Room 306.
More and more, Cities are becoming places of high concentration of real estate investments without direct relation to the social demand. This speculative urban production is efficient for private finance but costly for public investment. The huge financial assets facilitated by the quantitative easing are largely invested in land and real estate markets, becoming a more attractive sector than the real economy. The flow of private funding is fuelled by the high value of land and real estate, fostered by local authorities and governments pushing for higher property values, as the basis for generating higher fiscal income needed to finance utilities, facilities and public services. Economic actors are looking for creation of financial value rather than real economic and social values. Low interest rates trigger real estate production that served also as guarantees for taking out loans for other speculative investments.
Cities have always been the place for making money out of land and real estate. But today the significant increase of land and real estate prices is disconnected to the revenue of the population and the gap has a strong impact on the social, economic and spatial organization of cities: city centres decline or are empty because they are less accessible to citizens, new towns are ghost places despite an housing crisis…. The difficulties to identify the origin of most of these massive investments make them suspicious, possibly coming from underground economy. Cities with low regulation are more impacted than those with higher tax and strong urban development regulation (Shanghai and London, more than Paris).
The effect is higher segregation: exclusion by the market lead to removing population from central areas and make these place no longer affordable for a large part of the population. A lot of empty apartments (Paris from 6% to 20 % in 20 years) are creating ghost city centers (Beirut) with empty towers (25% of Dubai apartments).
This phenomenon is also touching the Global South. Developing countries are offering low tax level and low capacities for urban development control. When land registration is established, ensuring land security to owners, and real estate market is open to foreign investment, the construction market is booming (Phnom Penh with 630 towers in construction in the city center with streets of 10 meters). Private investors, supported by banks and international corporations, have also rights on public land and informal settlements on large tenements (land titling programs)
Planners are in trouble. Planning is based on socio economic needs shaping urban development programmes. Empty apartments and offices are generally considered as marginal and temporary. But today, new towns are built for investment without balanced housing-employment, or sufficient public transport related to jobs expectations (i.e.: Gift New Town near Ahmedabad). Urban design to attract investors seems more important than urban planning to deliver urban development for the population. The project should be attractive to investors despite of over expectation for jobs, function and population. Merchandization of urban services is following the same trend, making these services more expansive for the users, with a large difficulty for local authorities to control the quality of the service delivery.
Several questions will be discussed during the networking event:
- What are the effects of the financialization of the economy on urban development?
- How to mitigate the negative urban externalities of financialization?
- How to limit the risk for investors of real estate bubbles generated by financialization?
- How local authorities could control financialization to foster their public policies? What capacities to face and drive the urban development in developing countries?
- How far urban planning and urban development control and land management can regulate the urban development in the present context of high investments?
- What are the roles of networks (of cities, practitioners, regional network etc.) in addressing these issues?
- Ms Lola Davidson, Deputy Secretary General, INTA (International Urban Development Association)
- Mr Jean‐Pierre Elong Bassi, Secretary General, UCLG Africa (United Cities and Local Government ‐ Africa) , Rabat, Morocco
- Mr Eric Huybrechts, IAU (France) & MTPA (Metropolitan and Territorial Planning Agencies global Network)
- Mrs Bernadia Irawati Tjandradewi, Secretary General, UCLG ASPAC (United Cities and Local Governments Asia Pacific)
- Mr Enrico Campagnoli, former FIABCI World President
- Mr Michel Sudarskis, Secretary General, INTA