The financialisation of property and city structure

Cities, in both developed and developing countries, are the object of financial investments. Land and buildings thus become assets like any others, managed according to criteria for financial returns that are unlikely to converge with the goals of sustainable development. These financial mechanisms are playing a growing role in city structure.

This development is particularly striking in the central parts of large cities for corporate property, offices and shopping centres, etc.

One of the vehicles for this financialisation is securitisation, which consists in dividing a group of buildings, houses or plots of land into securities that are issued to the public. The financial management of such groups is generally based on short-term criteria, which are largely incompatible with the long-term vision of sustainable urban development.

The sub-prime crisis in the United States is a salient example of this risk of failure. Beyond this episode, the regulation of financial markets, in both physical and financial terms, appears to be a sine qua non for ensuring both sustainable urban development and the equitable sharing of capital gains from urban planning that are not the result of action by owners.

Contact: Vincent Renard