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Project

The Real Estate/Financial Complex: the cases of Brazil and Italy

The financialization of the built environment became a mainstream topic since the most recent Global Financial Crisis called attention to the intricate relations entangling the financial and real estate sectors. The Real Estate/Financial Complex (REFCOM) framework intends to unveil the relations that support the triad state, financial sector, and real estate sector in different national contexts; moreover, it also observes how these trends are actively shaping the built environment in cities across the globe (Aalbers, 2013). This doctoral thesis focuses on two national cases – Brazil and Italy – depicting, analyzing and scrutinizing these countries’ REFCOMs. Furthermore, it discusses the urban manifestation of these Complexes by examining two Urban Redevelopment Projects (URPs), Porto Maravilha (Rio de Janeiro) and CityLife (Milan).

Brazil and Italy still have clear traces of what could be named a “traditional real estate industry” (mostly national and often family-run construction companies, constraints for mortgage provision, small GDP/mortgage ratios, large homeownership rates, to name a few). Nevertheless, this study observed that both countries present visible traces of an increasing financialization of the sector. In Brazil, the financialization of the real estate sector is observable after the establishment of the Real Estate Financing System (SFI), which introduced new mechanisms and regulations to foster an increasingly financially-led construction sector. Meanwhile, in Italy, the transition towards a more financialized built environment is perceived through the new strategies adopted by banks – the main mortgage providers in the country – and also by the state, that has relied on financialized practices to overcome financial constraints at different administrative levels.

To understand the effects and the manifestations of an increasingly financially-led built environment, this thesis discusses two URPs as paradigmatic examples of the intricate relations that compose these countries’ REFCOMs. The Porto Maravilha project in Rio de Janeiro is the largest ongoing urban intervention in Brazil. Even though the urban development instruments that support this project have already been employed in other contexts, this specific URP has exacerbated the entanglement between the real estate and financial sectors and the state (municipal, state, and national levels), possibly setting a new trend in the national urban development scene.  The CityLife project intends to redevelop Milan’s old-Expo site and transform this “peripheral location” into a new high-end centrality. The peculiarity of this project is that it is completely privately-led and managed by the insurance company Generali, which was attracted to the business merely because it needed to renovate their Milanese portfolio. The direct involvement of an insurance company, incorporating the role of an urban developer, demonstrates how real estate (and the urban environment in a broader sense) has indeed become just another asset class (van Loon & Aalbers, 2017).

This thesis relies upon and contributes to a range of literatures. First, it directly speaks to an increasing demand for more diversified (real estate) financialization literature (Engelen, 2016; Fernandez & Aalbers, 2016; French, Leyshon, & Wainwright, 2011), foregrounding  two countries that are understudied. The focus on a Latin American and a Southern European case contributes specifically to the development of the (semi-)peripheral financialization studies, which attempt to grasp the paths and effects financialized real estate development has taken outside North America and Northern Europe (Büdenbender, 2017; Lapavitsas & Powell, 2013; Patatouka, 2017; Rodrigues, Santos, & Teles, 2016). Second, the urban chapters highlight the connections between a neoliberal/financialized rationale and the production of the built environment, touching upon a series of debates regarding the increasing propagation of entrepreneurial, competitive, financially-led city management strategies (Harvey, 1989; Moulaert, Rodriguez, & Swyngedouw, 2005; Ponzini & Nastasi, 2011; Vainer, 2011). Urban planning mechanisms that foster the financialization of the built environment, such as the Tax Increment Financing in the US American case, are observable in different countries and the experiences in Rio de Janeiro and Milan also contribute to the analysis of these increasingly popular urban planning strategies (Fix, 2000; Teresa, 2016; Weber, 2010). By introducing the Urban Operations (Brazil) and the Integrated Interventions (Italy), as mechanisms that promote and support financially-led spaces within cities, this study raises the debate of the mobilization of land as a financial asset beyond advanced economies. Third, the comparative structure of this PhD thesis resonates with the need for more comparative studies that move beyond Anglo-American comparisons and also venture into cities, a demand that is not only identifiable in the financialization literature, but in the urban studies more generally (Kantor and Savitch, 2005; Peck, 2015; Robinson, 2010; Sanyal, 2005).

Date:1 Oct 2013 →  16 Jan 2018
Keywords:financialization, real estate, refcom
Disciplines:Geology, Atmospheric sciences, Physical geography and environmental geoscience, Atmospheric sciences, challenges and pollution, Geomatic engineering
Project type:PhD project