Embedment of “Liquid” Capital into the Built Environment: The Case of REIT Investment in Hong Kong

Abstract

Since the Global Financial Crisis, the notion of securitization has become familiar to urban scholars, though research has been limited to mortgage-backed securities. This paper attempts to delineate the distinctive urban outcomes of securitization techniques applied to real estate, taking Hong Kong REITs (H-REITs) as a case study. It examines the way through which liquid H-REIT capital anchors into the built environment, and how this process impacts the life of local communities. The study shows that the urban dynamics of REIT investment contrast with the corporate environment and asset management objectives of the initiator/sponsor groups of H-REIT structures, a set of characteristics that are captured by the notion of “management styles.” Amongst the three management styles identified in the paper, those developed by the Hong Kong family-based groups have not been sufficiently active to produce significant effects on the built environment. In contrast, the Link REIT has an aggressive value enhancement strategy that has reconfigured the social geographies of retail consumption across the whole territory, to the detriment of social housing estate residents. These results support the recognition that the financialization of the built environment tends to exacerbate social polarization and to trigger political conflicts, but they must be weighed against the contingent conditions in which real estate securitization take place.

Reasserting state power by remaking markets? The introduction of real estate investment trusts in France and its implications for state-finance relations in the Greater Paris region

“…In order to make this argument, this paper analyzes the introduction of real estate investment trusts (REITs) in France. Although it is well known that national governments have used their state power to introduce REITs (Aveline-Dubach, 2016;Waldron, 2018), I argue that the French government has done so with particular dedication. First, the French state introduced legal and economic guarantees which enabled French REITs (unlike many other REITs) to engage in developmental activities (Nappi-Choulet, 2013a).…”

Fondos inmobiliarios cotizados y financiarización de la vivienda en Argentina

“…En este último caso, la venta de activos públicos y los defaults hipotecarios configuraron un escenario de "oportunidad" para este tipo de producto financiero (Waldron, 2018), mientras que en el caso español se ha señalado que los fondos de tipo REIT promovieron la profundización de las desigualdades espaciales, y la emergencia de un "rentismo financiarizado" en el contexto del manejo de la postcrisis (García-Lamarca, 2020;Yrigoy, 2018). En condiciones macroeconómicas y demográficas diferentes, los trabajos sobre el funcionamiento y gerenciamiento de los REITs en Hong Kong y Japón muestran divergencias en los impactos espaciales con respecto a los casos europeos, pero verifican la importancia de los mediadores estatales en alianza con los desarrolladores para la proliferación de los fondos (Aveline-Dubach, 2016.…”

The state project of crisis management: China’s Shantytown Redevelopment Schemes under state-led financialization

“…On the other hand, the financial constraints that resulted from the reduction in fiscal subsidies are reconfiguring municipal governance into a public-private partnership through which the prospective income from public utilities and land appreciation can be capitalized to balance the budget (Aalbers et al., 2017). Past decades have witnessed many endeavors by local states to employ sophisticated financial techniques or innovative financing approaches aimed at raising funds from the financial market for public projects in various contexts, for example, Hong Kong, Singapore and Chicago (Aveline-Dubach, 2016; Haila, 2000; Weber, 2010). Meanwhile, as pointed out by many scholars, the regulatory framework, urban planning and public policies linked to the new state project of crisis management have been purposively manipulated to pave the way for capital accumulation through financialized public projects (Aalbers et al., 2017; Fields, 2018; Weber, 2010).…”

“…To date, the role of the state in initiating, monitoring and steering the financialization process and its imprints on the urban built environment remains insufficiently explored in non-Western contexts, despite some continuing investigations (e.g. Aveline-Dubach, 2016; Forrest and Hirayama, 2015; Theurillat et al., 2016). To contribute to this collective endeavor, we aim to examine here the operational mechanism and socio-economic implications of state-led financialization through the lens of a state project of crisis management, with particular focus on urban redevelopment in China.…”

“…Büdenbender and Golubchikov, 2017; Pereira, 2017; Rolnik, 2013; Yrigoy, 2018). A small yet notable corpus of research has tapped into how financialization unfolds itself and reshapes urban agendas and landscapes in East Asian contexts (see Aveline-Dubach, 2016; Sum, 2011; Theurillat et al., 2016; Wang, 2015). Most of these studies seek to uncover how the changing financing strategies of the East Asian states aim to boost urban (re)development, yet rarely enter into an explicit dialogue with a productive line of inquiry regarding state projects of crisis management.…”