International Property Marketdriven Regeneration : a Challenge To

International property market-driven regeneration : a challenge to sustainable urban development? Trillo, C

Title International property market-driven regeneration : a challenge to sustainable urban development? Authors Trillo, C Type Article URL This version is available at: http://usir.salford.ac.uk/id/eprint/44109/ Published Date 2017

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Academic papers International property market- driven regeneration: A challenge to sustainable urban development? Received (in revised form): 13th May, 2016

Claudia Trillo teaches at the University of Salford, SOBE. She holds a PhD in Urban Design and has extensive experience in urban regeneration. Current research interests include: innovation driven and cultural-led urban regeneration, data governance and sustainable urban regeneration.

Abstract In Europe, urban regeneration still represents the principal mode in which urban transformation and development happen. The sustainable urban development (SUD) paradigm is based on the holistic concept of sustainability, stemming from the three pillars of environmental, social and economic sustainability. The complexity and multitude of factors affecting contemporary cities, however, challenges the adequacy of this paradigm with respect to the raising issues of identity and place ownership in a globalised world. Where significant international capitals flows become drivers for urban regeneration, it can be difficult to assess whether or not urban regeneration is really yet sustainable. Some key areas of European cities might be influenced by international property developers and management companies, with a potential impact on the decision- making process at local and even national level. Could selling the most valuable estate investments to foreign investors influence the sense of ownership of local communities? Could it undermine urban democracy? After having explored the above-mentioned issues through the literature, the paper proceeds towards its discussion through a concrete example. In particular, insights are drawn from the case study of Salford, a growing city in the heart of the ‘Northern Powerhouse’ UK city region. The paper finally suggests that: 1) the socio-economic impact of urban regeneration cannot be restricted to the mere capacity of the mechanism to rebalance inequalities, but it has to keep in account the wider investment process behind the financial input in itself; 2) a comprehensive assessment framework for sustainable urban regeneration should take into account the interconnections between local economic and international financial flows, estimating how the investment structure influences the long-term socio-economic sustainability of the investment; and 3) a variety of instruments and tools, supporting the non-profit and public actors’ participation, might help to rebalance an excess in speculative promotion.

Keywords: sustainable urban regeneration, local economics, property market, Salford

Dr Claudia Trillo University SUSTAINABLE URBAN of Salford, School of the urban transformation and development Built Environment, 43 DEVELOPMENT AND occurs, spanning from small and medium Crescent, Salford M5 4WT, INTERNATIONAL MARKET- DRIVEN UK to large and mega interventions. It REGENERATION E- mail: c.trillo2@salford. therefore represents a major concern for ac.uk In Europe, urban regeneration still the European Commission, due to the represents the principal mode in which

Trill o crucial role played by European cities in urban development can only be both in supporting the socio-economic achieved through an integrated development and in coping with growing approach’.8 Also in the current body of environmental issues. Since the 1990s, literature, consensus exists on the fact that coupled by the ongoing experience of SUD paradigm is based on the holistic implementing the community initiative concept of sustainability, stemming from 1 2 programmes URBAN I and URBAN II, the the theoretical elaboration of the three pillars of environmental, social emerging paradigm of sustainable urban and economic sustainability.9,10 It has development (SUD) has been put forward been noticed, however, that the concept 3 through incremental steps, such as the of sustainability associated with urban 1997 Communication ‘Towards an Urban development is still difficult to be 4 Agenda in the European Union’, the related and applied to the social 1998 Communication ‘Urban Sustainable 3 sustainability component. Development in the EU: A Framework Furthermore, it is nowadays accepted 5 6 for Action’, the 2005 ‘Bristol Accord’, that cities compete in the global arena to culminating in the 2007 ‘Leipzig Charter acquire a certain ranking in a consistent 7 on Sustainable European Cities’. tier of cities.11 In so doing, the attraction According to this latter, Member of foreign capitals in the redevelopment States recognised that ‘We increasingly of large urban areas plays a substantial need holistic strategies and coordinated goal. It has been noticed that housing action by all persons and institutions markets are increasingly becoming involved more and more market driven.12 The in the urban development process’ and complexity and multitude of factors recommended: affecting contemporary cities challenges the adequacy of the SUD paradigm with ‘A) Making greater use of integrated urban development policy approaches, respect to the raising issues of identity through the following actions: (1) and place ownership in a globalised Creating and ensuring high-quality public world. spaces; (2) Modernizing infrastructure City competitiveness, mega projects networks and improving energy and international capitals are deeply efficiency; interconnected. Where significant (3) Proactive innovation and educational international capital flows become major policies. B) That special attention is paid drivers for large-scale urban to deprived neighbourhoods within the regeneration, it can be difficult to assess context of the city as a whole, through the whether or not urban regeneration, following actions: (1) Pursuing strategies although smart,13 is really yet sustainable. for upgrading the physical environment; When this process (2) Strengthening the local economy and happens, in a long-term perspective, entire local labour market policy; (3) Proactive education and training policies for children key areas in European cities could end up and young people; (4) Promotion of being financially managed by efficient and affordable urban transport.’ international players of the property market. The problem is: does this Almost one decade later, within the influence the decision-making process at current European Urban Agenda, it local and even broader scale? Could is confirmed that SUD does require selling the most valuable estate an integrated approach, because investments to foreign investors influence ‘The various dimensions of urban the sense of ownership of local life — environmental, economic, communities? Could it undermine urban social and democracy? cultural — are interwoven and success To discuss these issues, the paper draws insights from the case study of Salford

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(Figure 1). This case has been purposely of a student population generated by selected because, although incorporated the presence of three internationally in a relevant metropolitan area, it is still top-ranked universities.16 Nowadays, the a second-tier urban centre and not a real Greater Manchester area is ‘the largest and proper global city. Therefore, the functional economic area outside London, property market dynamic does not reflect with a population of 2.7 million and the uniqueness of global cities such as — gross value added (GVA) of £56 billion’. in the UK — London. Salford is located Biotechnology, energy and services in the current Northern Powerhouse (financial and professional) are the major area, a fast-growing region in the north- sectors. Forecasts for the private sector 17 west of England. It is included in the are positive. Great Manchester area in continuity with In this geography, the city of Salford the city of Manchester. In recent years a plays an interesting role, being massive regeneration scheme, including involved in major redevelopment the area of Salford Quays, has taken initiatives deeply intertwined with the place, determining substantial shifts in economic success of the metropolitan land ownership and management. area, such as the relocation of the BBC The following section discusses the and ITV headquarters to the Salford current issues faced in Salford, in order to Quays area, which followed the provide readers, in the third section, with regeneration of the former Manchester some preliminary findings and conclusion, docks started to be planned in the 18 potentially applicable to the wider 1980s. international context. The history of the city of Salford and related current issues of urban regeneration are typical of industrial and INTERNATIONAL MARKETS post-industrial cities in Western countries. DYNAMICS AND LARGE-SCALE At the time of the industrial revolution, REGENERATION: INSIGHTS FROM the Manchester area was a leading place SALFORD for manufacture, particularly for its The city of Salford is located on the cotton and silk factories. In particular, north-western boundary of the city of Manchester docks, located in Salford, Manchester, on the river Irwell. It covers allowed an effective international 37sqm and hosts about 220,000 people. transport system, connected to the city Salford is part of the Greater Manchester through a network of canals and rails. metropolitan area in north-west England.13 Due to the high demand of workforce, The system of cities located in the Salford was a very attractive place and northern part of England is currently even became an area of overpopulation. seeking to promote a new common The 1970s’ process of containerisation strategy for growth, namely the ‘Northern and increase in size of ships had a deep Powerhouse’, to gain political recognition impact, as in almost all similar port as urban agglomeration capable to cope industrial cities, on the workforce demand with the challenges of the global economy. patterns, leading Salford to economic Core cities are Manchester, Liverpool, decline.19 The downward spiral affected Leeds, Sheffield and Newcastle.14 Within the whole urban system, inducing this economic and political context, the business and services to close and real estate market in the Manchester area affecting local public revenues, finally is growing,15 boosted both by a positive hindering the quality of public services. economic situation and by the demand The turnaround started with the already mentioned flagship intervention

Trill o Greengate. The combination of these three projects should bring a potential for 36,000 new jobs over the next three years.20:3 Recent

‘key achievements include: (1) The £550 million MediaCityUK development at Salford Salford Quays; (2) The start of works to build Port Salford which will potentially create over 1,000 jobs in the first phase with a longer term target of around 3,100 jobs; (3) The £26 million Salford City Stadium and future associated development;

(4) The completion of Greengate Square which is set to be the catalyst for £400 million in private sector investment; (5) New innovative projects like the Soapworks Figure 1: Salford and Greater Manchester area location. and The Landing; (6) The revitalisation

Source: http://www.visitsalford.info of key areas along Chapel Street and the riverside corridors of the Bridgewater Canal and the River Irwell; (7) The £650 million in the Salford Quays area, following scheme to transform Pendleton is the Salford City Council acquisition of underway. It will see 1,500 new homes the area in 1983, spanning over 150ha built, 1,300 homes modernised and 500 new 22 of land and 75ha of water area. The jobs.’ so-branded ‘Salford Quays’ intervention was aimed at placing ‘equal emphasis The vision for ‘a modern global city’ that upon work, leisure and residential land emerges from the overall map of the major uses, as well as to provide infrastructure regeneration projects area (Figure 221:82–83) such as roads and key services’.10:92 shows how the key areas are located Although some authors raised criticisms closest to the Manchester city centres, in terms of gentrification,10 it remains thus, they are areas with a higher market undisputed that this intervention acted potential in terms of centrality. Centrally as triggers for local economics and also located regeneration interventions include: for urban rebranding, as due to the Greengate, Middlewood, Chapel Street presence of two major companies in the regeneration schemes, all situated between media sector, the above-mentioned BBC the river Irwell and the Manchester border, and ITV, the area is now known also as as shown in Figure 3. ‘MediaCityUK’. The role played by international Since then, urban regeneration has investors in these regeneration schemes gained high priority in the political is significant. International developers agenda of the city of Salford. The Salford are either directly involved in the 2025 strategy20 highlights how in the last development phase, or are taking local ten years Salford had pursued a political and national developers over, following agenda having very ambitious objectives the building phase. This ongoing process on urban transformation and regeneration, is still difficult to be quantified, but it including, in addition to MediaCityUK, can be easily followed through local projects such as Port Salford and 23 newspapers and real agents’ websites. It exceeds the resources of this research to go in depth with a detailed map of

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Trill o the current properties, and to exactly than the regional and national benchmark quantify the ongoing changes, also due (Table 1). At the same time, the household to the fast pace of the process. It is worth space with no residents is higher than the mentioning, however, that in all three regional and national benchmark (Table above-mentioned major regeneration 2). Although it is out of the goals of this areas (Greengate, Middlewood and paper to find out possible answers or Chapel Street) international finance even attempt interpretations at this is a significant trigger of urban stage, it is worth suggesting some transformation. questions that might find room for In the Irwell ward, an inner area development in further research. Will where significant urban transformation Salford end happened, in the decade 2001–2011 a up being influenced by international shift from traditional terraced houses to property developers and management flats (particularly commercial buildings) companies, with a potential impact on happened, showing higher percentage the decision-making process at local and even national level, at unsustainable rate?

Table 1: Irwell Riverside ward: Dwellings and accommodation type change 2001–2011.

Source: Census data

Table 2: Irwell Riverside ward: Dwellings and household spaces in 2011.

Source: Census data

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Where significant international capitals authorities to act as private competitors flows become the drivers for urban in the global market arena, less attention regeneration, it can be difficult to assess is paid to the implication of inflating to what extent urban regeneration is really different kinds of capital in the yet sustainable. More generally, could traditional urban economic structure, selling the most valuable estate what it implies in terms of dependency investments to foreign investors influence of the decision- making process on a the sense of ownership of local system of interests that is no longer an communities? Could it undermine urban expression of the local social capital democracy? (local democracy), and how it affects the drainage of locally and nationally produced income towards POSSIBLE ALTERNATIVE PATHS international markets in the form of rents TOWARDS SUSTAINABLE LARGE paid to international financial corporations ESTATE PROJECTS IN URBAN (local economy). Some authors have REGENERATION discussed the relationship between Urban competitiveness and its ownership, participation and democracy, relationship with the local economics has concluding that the ownership structure been thoroughly analysed in the contributes to explaining the way in which literature,24,25 highlighting how urban people feel and act as part of the larger competitiveness local community;26 others have examined is a combination of phenomena including how ownership influences concepts as 27 the emergence of competitive bidding lifestyle, identity, social capital and trust. in the allocation of public funds, urban Beyond the socio-cultural matter entrepreneurialism and leadership. Jones of ownership and sense of and Evans26:68 observed that following the belonging, the socio-economic deindustrialisation, regeneration policies matter of the have tended relationship between the property market and international capital has an impact as well. The financial structure of the ‘to generate employment, preferably in capital investment is not an independent the form of middle- to high-income jobs factor. As in the financial market it is very in the service sector. While relatively clear that bonds and bank shares perform footloose in terms of material demands, service industries tend to cluster in areas differently, it should be also clear that that provide attractive living and a socio-economic risk is embedded in business environments. Cities seeking to accepting that a neighbourhood is treated stimulate as part of a share portfolio by economic growth have competed with one international speculative investors. another to attract such industries, with the As Jones and Evans26:94 also observe, result that they must “sell” themselves as although lacking a real and proper desirable locations within the new quantitative evaluation for this and economy.’ although social critiques of the uneven distribution of benefits have arisen in The new geography of cities, as a result some cases, consensus exists on urban of the new economy, has been deeply regeneration as tool to reverse economic explored also in urban geography decline of neighbourhoods and cities, studies.27 What is still missing in all these sometime capable of achieving social studies, however, is the analysis of the sustainability as well.29 From a civic relationship between different kinds of economic perspective,30 however, investments and long-term socio- economic values are not only related to economic stability. If it is widely accepted that a shrinkage in public finance is inducing local

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the quantitative increase of the flow on to speculative development should be money. Civic economic dates back to the created, including non-profit; municipal Illuminist Italian economic tradition,31 in purchase of building land should be which equity and ethic were considered encouraged. Overall, the rationale is that it necessary factors for the collective is not by fostering market competition, as wellness and therefore equally important is currently meant in a simplistic manner, as the quantitative production of wealth. that a higher socio-environmental quality Considering the collective wealth as a is achievable; rather it is by triggering result of multiplying the individual the participation of a variety of multiple benefits (civic economic approach) actors into the property market that an instead of a result of adding the individual excess in speculative promotion can be benefits (classic economics) implies that if counterbalanced. The system of values the wealth of just one single individual is behind the property market is much more zero, the whole collective good is null. complex than other goods, such as health Within this rationale, successful urban and education, and cannot be assimilated regeneration schemes would perform very into any other products. differently by only taking into By applying this suggestion in order consideration volatility of the economic to reassess the level of success of the performance and long-term stability of the current urban regeneration schemes in social capital. Salford, The investment mechanism and it can be then noticed that in some process, and not only the investment as an circumstances, such as in the Greengate input in itself, gains attention, because the scheme, as well as in the Chapel Street rationale of the investments deeply regeneration scheme, a variety of tools and influences instruments allowed the participation of who are the winners and who are the a variety of stakeholders, such as: 1) the losers. A possible conceptualisation of city retained the property of some key this model could build on the speculative public spaces within the market housing vs not-speculative model suggested for in Greengate, thereby avoiding the the Finnish housing market by Bengs and gated community effect of some wealthy Ronka.31 In this model, enclaves, with no access for all; 2) the presence of English Cities Fund in Chapel ‘(1) non-speculative promotion indicates Street played a significant role as it promotion on a non-profit base, or that the allowed use of the income from part of the profits are “reasonable”, [in which either] most valuable centrally located properties the future owner acts as developer [or are to rebalance the presence of public spaces in the case of] social housing, carried out in less central areas. either by public agencies or development In conclusion, the discussion of the associations’,32:128 [while] (2) speculative promotion means that the developer is case study has allowed to substantiate acting on a maximum profit basis, [and is] with concrete observations three major organized in such a way that the developer findings: and builder are different agents, the developer’s choice of builder being based 1) The socio-economic impact of urban on tender or agreement, [or] the builder can regeneration cannot be restricted to 32:127 also operate as developer.’ the mere capacity of the mechanism to rebalance inequalities, but it has to Within this framework, an excess of keep in account the wider investment speculative promotion can even hinder process behind the financial input in competition. Recommendations from the itself. authors include: a variety of alternatives

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