Entrepreneurial public real estate policy: The case of Eiranranta, Helsinki

Abstract

Finnish cities own a significant amount of land, and used to allocate it free of charge for schools, day care centres and libraries. Today they tend either to sell the land they own or when leasing to charge market rent. Selling public land is justified by arguing that it brings money to the city, and charging market rent is claimed to make the use of real estate more “efficient”. This article investigates this new policy we call entrepreneurial public real estate policy. We focus on its justification and effects on the production of the built environment. Our case is a residential area called Eiranranta, located on the prestigious southern shore of Helsinki, where the City of Helsinki sold land to private developers who built a residential area for wealthy homeowners. Our analysis shows unintended and harmful consequences of this entrepreneurial public real estate policy. First, by selling the land to private developers who developed the area for homeowners, the City ceded its planning power with no demands that the area should include social housing. Second, by selling public land to private developers who managed to sell the apartments they built at record high prices, the City reinforced the trend of excluding from the city those who cannot enter the housing market. Lastly, a private fenced residential area exclusively for high net-worth individuals that was developed on the privatized land introduces a new type of development to Helsinki that has so far been absent in a Northern welfare city.