Ramin KeivaniUK-Brazil Urban Research Network

Oxford Workshop9-11 March 2011

Globalisation and land markets – Scope for pro-poor

development?

Main Research questions• What are the main characteristics, drivers and limitations of the initiative

under consideration?• How do these initiatives relate to the main concern of this network for

enabling governance for sustainable and flexible urban futures?• Does governance actually matter in the success or failure of these initiatives?• If it does then what are the emerging forms and patterns of governance that

are most effective for developing and implementing policies for economic growth, environmental sustainability, social inclusion and poverty alleviation?

• What other actions or interventions can governments (at different levels), private sector and civil society actors make to facilitate more sustainable and flexible urban futures in the fields under consideration?

• What are the key transferable or informative lessons for consideration across each country?

• What are the conceptual and theoretical insights that can be drawn from exploring these issues across both countries?

• What are the key issues in each field that would need to be developed as part of a broader research agenda for addressing the main objectives of this network?

Globalisation: What does it entail?

Implies that a world composed of separate national economies is being superseded by a single global economy, States by global markets – countries/cities become junctions in flows that governments have less control

Uneven development Path dependent

Macro economic effects Deregulation, liberalisation, sectoral shifts

New city economy as junctions of flowPervasive effects in the North and South

Impact on urban form and property1

• City development reoriented in line with spatial requirements of international capital– Occupier demand• Intensified redevelopment of Central Business Districts,

creation of new CBDs – Three CBDs in Sao Paulo!– State of art office space with global connection

• Globally connected industrial estates• Retail, leisure and hospitality facilities• Housing

– Investment demand• Core and opportunistic investment depending on:

– Institutional risks» Property laws and regulations, professional services, contract

enforcement, etc– Market risk

» Interest rates, recession, wars, political stability, economic growth, etc

Total investible and invested real estate by region in 2009 (RREEF, 2010a)

Impact on urban form and property2

Encroachment on cheaper peripheral landParticularly for industrial development and

upper middle class housing

Formation of extended metropolitan regions and even larger mega urban regionsE.g., Macro Greater Region of Sao Paulo Blurring of rural and urban dichotomy,

shifting industrial activities to peri-urban and rural areas, agglomeration economies, etc.

Restructuring city economies and resultant spatial reconfiguration and redevelopment

All of this means major investment in real estate both as a direct result of global investment diversification strategies and indirect result of (globally induced) development activities

But what about Brazil and Sao Paulo?

Sao Paulo: an emerging global city!?• Widely recognised as the main gateway to Brazil and the

centre of Brazilian economic growth producing 34% of national GDP

• Service and Finance sector 47% of state GDP• Industrial sector still highly important at 46% of state GDP• Transition to a high value global function is still

incomplete but the trend is one of gradual de-industrialisation and development as a HQ and service centre for Brazil and the Mercosur Region

• Booming Real Estate market from both international and local demand– Mortgage lending doubled to $42 billion between 2009 and 2010– Attracting large scale and individual international investors– Emergence of a large number of real estate funds for indirect

investment across different sectors targeted at International investors

Global Network Connectivity175 firms – 526 cities (Pain, 2009)

Rank GNC 2008

1 London 100

8 Shanghai 69.74

12 Seoul 63.5

16 Buenos Aires 61.19

17 Mumbai 60.86

18 Kuala Lumpur 59.72

19 Warsaw 56.4

20 Sao Paulo 56.19

2000

16 Sao Paulo 54.74

23 Buenos Aires 44.56

Latin America 2009 commercial property investment activity (RREEF,

2010b)

Global real estate market value in 2009 (RREEF, 2010a)

School of the Built Environment

Globalisation and its urban discontents

Globally driven economic and spatial restructuring can severely aggravate pre-existing social inequalities and create new ones!

Looking at the problem from another perspective

26% of MRSP live in Favelas and illegal settlements

Rising to 43% in peripheral areas

Overall 70% of land in the city is covered by substandard housing

Affecting 57% of MSP population

School of the Built Environment

Demographic shifts in Sao Paulo (Torres et al, 2007)

Increasing population in peri-urban areas to 30% by 2000

8.1% annual increase in these areas

-2.5% negative growth in central areas

Rapid urban sprawl in Sao Paulo(Torres et al, 2007)

Distribution of real estate projects (Torres et al, 2007)

Formal development companies housing only 23% of additional households during 1990s

Peripheral areas dominated by self built low income housing

620000 abandoned buildings in the centre more than estimated housing deficit in MRSP!?

A complex and contested spatial geography (UN-Habitat, 2010)

• City of walled estates intermingled with favelas

• Conflict with developers over valuable central land

• Driving the poor out: the case of jardim edite a ZEIS designated area that did not work as planned

• Dynamics of the formal property market driving urban sprawl and reinforcing social and spatial segregation!?

School of the Built Environment

But what are the opportunities for the low income population?

Economic readjustments in peripheral/peri-urban areas and connections to the main formal economy, e.g., informal workshops and service sector activities supporting formal sector

The role of land and property as assets for income generation, Home-based enterprises

Institutional constraintsProperty rights: tenure, development, use and

exchange

Towards an analytical Framework

School of the Built Environment

The role of urban governance1A definition:

Broader than government entailing the process of interaction between the public sector and various actors and groups of actors in civil society

Crucial to this are power relations and interactions between agents that determine management and allocation of resources particularly access to and use of land

School of the Built Environment

The role of urban governance2

• Devas (2001) identifies the necessity for congruence of three critical factors:– inclusive political process– sufficient competence and capacity of city governance institutions– pressure from civil society

• Globalisation creates particular conditions that have direct and specific consequences on all of the above,

• But what are the possibilities for new forms of governance that can be more responsive to future equity challenges?

Developing an institutional understanding of land markets• In terms of NIE impact of transaction costs

and institutional constraints– costs of negotiating and completing

transactions– Formal and informal rules and social

structures for facilitating and organising interests of actors and enforcing principal/agent relationships

• From a more sociological perspective complex articulation between structure and agency that must be seen within the wider debate on social production of space

Capital Asset FrameworkIncreasing low income capabilities to

accumulate assets and remove obstacles to its productive use

This would mean ability to use, earn income from and exchange property

But does it mean increasing formal property rights or rights over property?

To answer this we must understand not only informal property processes but also the social value of land and property for the poor.

What about the Brazilian context?

• An array of national, state and municipal level institutional innovations for more equitable growth:– The statute of the City has provided the scope for greater

socialisation of development benefits:– Zones of special Social interests– Participatory planning– Etc…

• But what has been the effect on the ground?– How have the institutional and governance arrangements

impacted the implementation?– Are good laws/institutions sufficient?– What are the limits of participatory governance? How can we

create the conditions for effective implementation to balance differentials powers for influencing decision making in a contested terrain?

• What type of institutional arrangements and implementation mechanisms on property rights are best suited for enhancing low income capacity to benefit from land development?

Key areas for a future research agendaForms and processes of urban governance

on land use and property developmentInstitutional context of formal property

market and underlying drivers for social production of space

Informal market processes Interface of formal and informal markets

particularly in terms of how the former is impacting the latter

The scope for low income asset consolidation and capital accumulation

Thank you

ReferencesDevas, N. (2001) Does city governance matter for the urban

poor, International Planning Studies, 6(4), 393–408.Paine, K (2009) Londres – The place to be,

Sciences Humaines, Les Grands Dossiers, 17.RREEF (2010a) Global real estate insights 2010, RREEF

London, www.rreef.comRREEF (2010b) Latin American real estate markets in

perspective, RREEF San Francisco, www.rreef.comTorres, H, Homberto, A and De Oliveira, M.A (2007) Sao

APulo peri-urban dynamics, Environment and Urbanization, 19, 207-223.

UN-Habitat (2010) Sao Paulo: a tale of two cities, http://www.unhabitat.org/pmss/listItemDetails.aspx?publicationID=2924