THE ROLE OF LOCAL GOVERNMENT IN REAL ESTATE DEVELOPMENT: KEY FACTORS IN RESTRUCTURING POST-SOCIALIST, SECONDTIER EUROPEAN CITIES

Abstract

After a 40-year period of government domination and planning, former socialist countries began an uneven transition to a free market economy. The diachronic aspects manifest in various larger-scale economic and political fluctuations have been well documented. Less well documented are the synchronic characteristics of these transitions manifest in urban development patterns. In the 1990s, with large inflows of capital and the restitution of property, real estate markets in Poland, the Czech Republic and Hungary began to develop. Large inflows of foreign direct investment (FDI) were directed mostly toward activities in the capitol cities where new retail, office and residential space was developed. Thus, while capitol cities experienced prosperity, many second-tier cities were neglected by international real estate developers and investors. No small part of the lagging real estate development in these second-tier cities derived from the capability of local stakeholders, particularly government and its agencies. As a result, growth of the larger national economies was restricted. Using a case study of four second-tier cities in Poland and the Czech Republic, this paper examines pre- and early post-transition urban and real estate development patterns involving greenfields, brownfields, blank spots, network and surface infrastructure in these cities. It compares the patterns in these cities to identify key similarities and differences in how they enhanced or limited further real estate development and discusses the role of local government as it has previously and should in the future address how large-scale urban patterns can be managed to stimulate effective real estate development.