Urban Rent Research Articles

The Evolution of Urban Rent Theory: Class and Distribution

Rent as a category has been analyzed within economics for over 250 years. Though much has changed since the days of David Ricardo, and Johann von Thűnen, most contemporary theorists consider themselves to be aligned with these early thinkers. More significantly, there is a pervasive belief that the power relationships explicated in the late 1700s and early 1800s hold for urban rent today. This has had two consequences. First, as urban economists continue to justify their work within a much older tradition, the move from production cost theories towards marginalist approaches has occurred largely without comment. Second, the existing urban power structures, with their particular causes and evolutionary histories, have been under-evaluated. The result is landlords seen as either exclusively functional, or as landed aristocrats, neither view producing instrumentally useful analysis for the urban market today. The first portion of this paper outlines the evolution of urban rent approaches, calling attention to the theoretic shifts which have occurred in the meaning of the market. This establishes the need for the latter half of the work, which outlines the basis for an institutionally grounded approach to urban rent. Such a theory is necessary if there is any hope of illuminating the distributional impacts of rental housing allocation.

Space and technology in catching-up economies: “the city as a laboratory for innovation”

Successful catching-up economies tend to exhibit a set of properties: (i) rapid increases in skilled labor and R&D investment, (ii) industrial structure upgrading from technology adoption toward technology creation sectors, and (iii) spatial concentration on the rise. The paper accounts for them by combining the mechanisms of skill-city complementarity and knowledge spillover in the setting of catching-up economies where ideas are more challenging to find along the growth path. With the diminishing possibility of adopting existing ideas, catching-up economies gradually rely more on creating ideas, which requires efficient knowledge spillover through urban spatial concentration based on ability sorting. We highlight that (i) catching-up economies choose proper city size and structure to benefit from growth effects through fostering innovation and spillovers, and (ii) rents here are not just an economic rent but play a productive role of allocating innovative abilities over space in an incentive-compatible manner. We discuss the policy on urban rents.

From Patronage to Commodification: The Urban Policies of the True Path Party in The Neoliberal Era

In the study, the urban policies of the centre-right in the struggle to establish neoliberal hegemony in Turkey, which became clear in the 1980s, were examined by focusing on the True Path Party (TPP). Thus, it is aimed to reveal the change in the urban policies of the Party in the neoliberal process. In order to achieve the stated purpose, historical comparative research method was used in the study. It is thought that a comparative examination of the period from the establishment of the Party to Demirel's Presidency and the period when Çiller was Chairman of the Party can reveal the discontinuities, dilemmas and continuities experienced between the two periods in the Party's land policies, depending on the neoliberal perspective. It has been concluded that in the Party's discourses about the city in the period until Demirel's Presidency, it highlighted the patronage-based populist policies that were widely implemented during the Justice Party period, rather than the commodification process implemented by Motherland Party. During the Çiller period, TPP's urban policies went hand in hand with capital accumulation based on marketization and were based on the exploitation of non-commodified urban spaces, similar to the Özal period. However, while Özal was able to gain the consent of both the urban poor and the capital for a long time in sharing urban rent with the policies he implemented, Çiller could not achieve the balance between these two interest groups competing on urban land with the new property and zoning regulations she implemented. Thus, Çiller broke the Party away from Demirel's discourse, which made abundant references to welfare policies, and this caused the support of the urban poor, whose importance was increasingly increasing in the transforming social structure of the country, to shift towards new political movements. As a matter of fact, the Party lost the support of the most urban voters among its voter base and could not win any metropolitan municipality in the 1999 local elections.

Depreciation of urban properties and demolition threshold

The Italian territory is characterized by the presence of numerous degraded buildings, which consequently undergo significant depreciation due to their age and obsolescence, resulting in a reduction of their attributed value. This phenomenon is observed in various areas of the country, both in large cities and small urban centers. Degraded properties pose an aesthetic problem as they contribute to a negative visual impact on the surrounding environment and may affect the quality of life of local communities. They also present socio-economic challenges considering the costs required to restore degraded buildings to normal conditions of use. This study analyzes the dynamics of the market value of a property by separating the contributions provided by the built structure and the land. The depreciation of the built structure is generated by a plurality of factors, all linked to the inevitable passage of time, which can influence or determine the end of the service life of the building, or its economic useful life. The phenomenon of urban rent (positive or negative) also acts on the latter, determined by external factors independent of the technological and physical characteristics of the building. Based on the logical interaction between the two phenomena - the depreciation of the built structure and the urban rent - this study attempts to define a relationship capable of suggesting the potential threshold for demolition.

The Failed Housing Cooperative Project of the Oriental Savings Association: Housing and Urban Rent in Istanbul in the 1880s and 1890s

The Failed Housing Cooperative Project of the Oriental Savings Association: Housing and Urban Rent in Istanbul in the 1880s and 1890s

Marxist Rent Theory and Its Applications in Developing Countries

The conceptual tools of Marxist rent theory, such as absolute and monopoly rent, need clarification. The institution of landed property, alone, is not responsible for absolute rent. The Marxist theory of land rent continues to apply under two contemporary conditions: (1) the agrarian stagnation in developing countries such as India and (2) the urban rents and property prices. Most owner-cultivators in developing countries could be earning negative rents. Furthermore, differential rents and monopoly rents — fueled by speculation and state policies — explain movements in urban rent and property prices if the organic composition of capital is similar across sectors.

Structural violence and the urban politics of hope in Ankara, Turkey

This paper examines the role of violence in Turkey’s state-coordinated pursuit of rapid urban transformation. We argue that the Justice and Development Party (AKP) implemented an urban development regime that relied on structural violence to control and distribute urban rent, housing and land. Despite framing this mode of urban transformation as a way to include marginalised urban populations in economy and society, it ultimately proved to be politically and economically unsustainable. In response to resistance, the AKP shifted its strategy to one of coercion in order to maintain control of the pace and scope of urbanisation. We present original research from Ankara and show how this strategic shift unfolded through an analysis of urban policy and planning practice. By highlighting the negotiated nature of Turkey's urban transformation and the limits of structural violence, this paper offers insights into the complexities of contemporary urban politics.

Planning regulation and land value capture in Italy between traditional approaches and new perspectives

Urban development and regeneration processes are both influenced by changes in the level of land rents over time and space. Public intervention in land markets, including planning regulation, affects rent dynamics through discretionary decisions that create clear advantages and inequalities in landowner treatment. Focusing on Italian approaches to planning regulation and land value capture (LVC), the research investigates the evolution of the theoretical debate on windfalls for wipeouts and the different approaches and instruments for managing urban rents. The characteristics of the national housing market and the relevant socio-economic and territorial disparities require a better understanding of contemporary rent dynamics. The conclusions suggest that the traditional and mainstream conception of urban rent, as an unearned gain for the landowner, needs to be revised and LVC should be addressed to support regeneration policies.

Factors affecting rental prices in the Russian Empire

In this study, we investigate the determinants of rental prices in Russian Empire prior to World War I and the variation of housing rents across cities. For our research, we use statistical data on 1232 cities in 1910. Our analysis shows that the urban rents in imperial Russia were affected by such city characteristics as its population structure, prices for different goods, and the geographical position. In addition, the impact of these characteristics depends on the levels of rents and of the explanatory variables.

Flattening the curve: Pandemic-Induced revaluation of urban real estate

We show that the COVID-19 pandemic brought house price and rent declines in city centers, and price and rent increases away from the center, thereby flattening the bid-rent curve in most U.S. metropolitan areas. Across MSAs, the flattening of the bid-rent curve is larger when working from home is more prevalent, housing markets are more regulated, and supply is less elastic. Housing markets predict an urban revival with urban rent growth exceeding suburban rent growth for the foreseeable future, as working from home recedes.

The value of the city. Rent extraction, right to housing and conflicts for the use of urban space

The extent of residential alienation and urban inequalities made visible in the aftermath of the 2008 financial crisis shed light on processes of politico-economic transformations that altered the role of housing within society since the late 1970s. The focus on (re-)commodification and financialization has become central in the debate and opened up rich interdisciplinary strands of research on the impacts that these processes have on housing. Building on such a fertile academic body of work, it is paramount to contribute to the setting of the public agenda, putting housing issues at the heart of the political debate and policy actions. Introducing this special issue, the paper is firstly asserting the political dimension of housing. Secondly the issue of urban rent extraction is discussed as crucial, especially in the face of the disruptive effects of extensive processes of re-commodification and financialization of housing and land markets in a context of neoliberal urban policies. Thirdly, the Italian case is presented as extremely relevant when it comes to understanding the political dimension of housing, recalling the controversial debates and clashes developed along the 20th century and the current trends of a country confronted with intense processes of financialization of housing, with a significantly accelerated real-estate cycle transforming the residential landscape and resulting in the most intense building cycle of the last half-century. Finally, the dynamics of de-politicisation (and re-politicisation) of housing are recalled with reference to the contributions collected in this special issue.

The dynamics of house price in Vietnam

ABSTRACT We have assessed the housing market of Vietnam, with particular apartment prices in 10 urban districts of Hanoi, the capital of Vietnam. Significant determinants of house price include construction cost, income per capita, urban rent expense, and lending rate. Our findings show statistically significant and dynamic determinant effects on the apartment prices of 10 urban districts of Ha Noi. There are signs of volatility clustering in the GARCH effect at nine districts’ apartment prices, all with magnified effects. Amongst the ordinary least square (OLS), robust least squares (RLS) and bootstrap technique, RLS presents more significant fundamentals with higher Rs squared than the OLS and bootstrap on individual districts and overall Hanoi apartment prices. We find signs of price bubbles in the first quarter of 2015. While this quantitative analysis is limited to the north of Vietnam, the findings also provide insights into other significant centres of Vietnam. It also provides a basis for apartment price forecasts to the stakeholders in the housing market of Vietnam, investment decision-making and portfolio management for both household investors and mortgage investors. The study outcomes can be used to forecast the volatility dynamics of the expanded types of dwellings.

Mind the rent gap: Blackstone, housing investment and the reordering of urban rent surfaces

Recent years have seen a burst of new writing on the opening and closing of urban rent gaps. Such studies generally consider individual cases. Rarely does the opportunity arise to readily compare and contrast rent gaps across multiple cities and territories, least of all within the context of a single developer or investor portfolio. Such an opportunity has arisen in the past decade, however, as the US investment firm Blackstone has pursued a multi-territory housing-investment strategy specifically of identifying and closing rent gaps, which it styles ‘buy it, fix it, sell it’. This article examines that strategy and the varying nature of its implementation in Danish, German, Swedish and US cities. It argues that the rent gap is a paradoxical phenomenon: vast gaps, promising vast profits, frequently open up and frequently remain open for long periods before being closed – if they are closed at all. A primary reason is that successful and profitable closure requires not just favourable local political-economic conditions but a singularly well-funded, determined and aggressive investor – an investor, that is, such as Blackstone.

Taxation of Rent from Ricardo to George

Due to current urbanism practices that are rent-oriented and far from being sustainable, the need to purify cities from the pressure of rent has arisen. This need has prompted professionals to seek solutions. The land value taxation method which can be defined as the suggestion of taxing the land in full or at a higher rate compared to the improvement on it, unlike the classical property tax approach, is a tool that needs to be worked on with the potential of providing the transfer of urban rent to the public by appropriating rent through taxation. This tool can also be used to solve various rent-based urban problems. In this study, which examines land value taxation in terms of the history of economic thought, the development of the land value taxation proposal is summarized by explaining the position of Ricardo’s rent theory in the aforesaid development and the approaches of two thinkers regarding the rent and taxation of rent are compared. The structure of the study is principally based on two books: Henry George’s “Progress and Poverty” and David Ricardo’s “Principles of Political Economy and Taxation”. As a result of the analysis made in this study, it can be said that Ricardo and George hold differing views of rent which are both based on different foundations. In relation to this, it has been deduced that Henry George, while questioning the system of private ownership in land while researching the paradox of progress and poverty, and proposing land value tax for returning rent to the public that created the progress, is more effective in finding solutions to the problem of returning the rent to the public.

Land and Housing in Singapore: Three Conversations with Anne Haila

AbstractAnne Haila is credited as one of the pioneers in developing a new theory of urban rent, distinct from neo‐Marxist treatments of rent in the 1970s. In this reformulation, she looks into the agents and institutions of land, with land as a financial asset, where its management and use become pivotal to our understanding of the contemporary city. One of the central elements in this reformulation is the attention paid to the state and its management of land. The three conversations developed in this essay elaborate on Haila’s focus on the state and its land policies. By focusing on the events that propel the state to act in housing provision, to intensify its management of land for housing and economic development, and to evade the provision of housing for some groups in society, I show how state interests with regard to land and housing are conditioned and evolve over time.

Flattening the Curve: Pandemic-Induced Revaluation of Urban Real Estate

We show that the COVID-19 pandemic brought house price and rent declines in city centers, and price and rent increases away from the center, thereby flattening the bid-rent curve in most U.S. metropolitan areas. Across MSAs, the flattening of the bid-rent curve is larger when working from home is more prevalent, housing markets are more regulated, and supply is less elastic. Housing markets predict an urban revival with urban rent growth exceeding suburban rent growth for the foreseeable future, as working from home recedes.

The ‘future’ of urban rent from the perspective of the metropolitan territorial plan of Naples [Il “futuro della rendita” nella prospettiva del piano territoriale metropolitano di Napoli

The Metropolitan City of Naples, as in the art. 1 of its Statute, aims «to restore the environment, to regenerate and reorder the urban tissue, to safeguard the common goods, guaranteeing their access, to reorganize the territorial polycentrism, overcrossing the center-periphery dichotomy and to promote the civil, social, cultural and economic development, enanching the diversities and the territorial excellences». In the Statute (at Article 35), the Metropolitan City is expected to provide coordination and general territorial planning by means of the Metropolitan Territorial Plan, consisting of a structural and an operational component, with measures of “urban equalization”. The structural component defines the vision of the territory, while the operational one programmes the actions of metropolitan interest to be implemented by the metropolitan city as well as the indications for the municipalities of the metropolitan city over a three-year period. In December 2017, the proposal for the Territorial coordination plan was adopted, which substantially recovers the Provincial Territorial Coordination Plan of 2007, repealing certain parts. The TCP of the metropolitan city of Naples is based on the redevelopment of the existing patrimony as a way of contrasting land consumption, in line with government plans. The main strategic elements of the plan, in fact, are the conservation and enhancement of the environmental, natural, cultural and landscape heritage, the adaptation of the housing supply, concentrating it only on the margins or within already established sites – densification –, and the enhancement and re-articulation of the urban system in a polycentric and reticular key. It is therefore, from this perspective, that this article seeks to elaborate a number of reflections on the possible ”future of urban rent” in the context of the metropolitan spaces of Naples, where the “potential” of the value of abandoned land in peripheral and/or peri- urban areas assumes a strategic role in the processes of regeneration and densification envisaged by the TCP. In terms of TCP operation, the principle should be to “expropriate” as little as possible, making use of the “equalization instrument” to ensure economic operators the necessary profit (an “interest in doing”).

The urban rent in the multicultural city: retail shops, migrants and urban decline in the historic centre of Palermo [La rendita urbana nella città multiculturale: attività commerciali, migranti e declino urbano nel centro storico di Palermo

Changes in consumer shopping behavior and in retail spaces, such as shopping malls, department stores and e-commerce, have modified localization models of traditional retail shops, also affecting urban fabric and spatial distribution of urban rent. Even city centers have undergone significant transformations or even decline, especially if local economic system and real estate market are weak and recessionary. A significant amount of commercial properties may have long vacancy due to excess supply, since many traditional shops close their business because they are no longer competitive and, moreover, there is no immediate takeover by new tenants. The decline of central urban areas depends on the interaction of multiple economic, social and cultural factors, but it can be countered by urban policies oriented not only to physical redevelopment of urban fabric, but also to social cohesion and multiculturalism. Migrants bearers of varied cultural values, coming from different continents and settling permanently in the Italian cities, have rented some of these empty properties by locating retail shops specifically oriented to their own communities or also to the citizens needs. The presence of migrants contributes, indeed, to support the retail real estate demand, to mitigate the minus-valorization of real estate capital and also to contain the revenues contraction. This phenomenon has been analyzed in some streets of the historic centre of Palermo that are traditionally shopping areas and have become the privileged place for locating retail shops managed by immigrants.

Mercado del suelo, renta urbana, y problemática habitacional. Una aproximación teórica desde la Ciudad de Buenos Aires

Mercado del suelo, renta urbana, y problemática habitacional. Una aproximación teórica desde la Ciudad de Buenos Aires

Affordable Housing vs. Urban Land Rent in Widespread Settlement Areas

Social housing constitutes a partial response to the demand for affordable housing. In Europe, there are different forms of social housing, which are distinguishable based on whether they employ a universal or residual approach. The latter is employed by Italian initiatives for social residential construction, the financial instrument of which is the Investment Fund for Housing, a closed-end fund managed by CDP (Cassa Depositi e Prestiti) Investment, which provides public–private partnerships. The main obstacle to the supply of low-cost houses is the high cost of building areas or, in other words, the high urban land rent. The value of building areas is particularly high in urban areas and in widespread settlement areas, for instance, in Northeastern Italy. The main objective of this paper is to identify the trade-off between urban land rent and housing affordability in a social housing intervention in Pordenone (Northeastern Italy). Four different scenarios are developed, the variables of which are: Cost of the area (urban rent), cost of construction works (quality of the buildings), and household income distribution. The results show that achieving the economic and social objectives of a social housing investment simultaneously is not possible in any of the scenarios evaluated. To allow the social groups most in need to access affordable housing would require a reduction of approximately 30% of the estimated cost of a building area.