Producing gentrifiable neighborhoods: race, stigma and struggle in Berlin-Neukölln

Abstract

Through a case study of an immigrant dense working-class neighborhood in Berlin, this article asks how racial and territorial stigmatization figure into state-enabled financialized gentrification and resistance against it. While there is a discussion on territorial stigmatization in the gentrification literature, this debate remains understated in the emerging financialized gentrification literature and rarely connects to race. Debates on resistance to financialization, in turn, while being attuned to the detrimental effects of stigmatization on struggle, pay little attention to the role of the local state as a producer of stigma. In this article I draw together debates on financialization, state-enabled gentrification and racial and territorial stigma to suggest that the local state, through its oppressive classifications and racialized representations of urban space, contributes to preparing the symbolic and material structures on which finance capital is able to flourish, not only by normalizing displacement, but by hampering resistance and demobilizing local working-class communities.

Keywords:

• Racial and territorial stigma
• gentrification
• financialization
• struggle
• local state
• Berlin

Introduction

There is an extensive discussion on the role of the local state in the gentrification process. Scholars have repeatedly shown that gentrification is neither natural, nor a pure market outcome, but politically engineered (Bernt, 2012; Bernt & Holm, 2009; Hackworth & Smith, 2001; Slater, 2017; Van Gent & Boterman, 2019). With gentrification taking an increasingly financialized form, the role of the state has become even more intricate (Aalbers, 2019). States, and the local state in particular enable capital flows through deregulation, zoning, privatization, enclosure and public subsidies (Aalbers et al., 2017; Bernt et al., 2017; Çelik, 2021; Olsson, 2018; Teresa, 2019). As financialized gentrification is more recently reaching affordable rental housing and affecting hitherto ‘untapped’ (August & Walks, 2018, p. 189) communities (Christophers, 2021; Fields, 2015; Fields & Uffer, 2016; Risager, 2021; Teresa, 2019), the question occurs how the state figures into producing the discursive technologies and interventions that reinforce and normalize the extraction of value from low-income neighborhoods and their inhabitants. In studies on the changing political economy of housing this question is not discussed center stage, though it is often mentioned as an important factor trifling resistance (Crosby, 2020). Particularly issues around race and racialization are muted or not sufficiently theorized (Fields & Raymond, 2021; Hackworth, 2019; Imbroscio, 2021; Tyler, 2015). As Hackworth (2019, p. 51) has suggested, in the context of gentrification, race is typically only mentioned as a side-issue, mostly in conjunction with displacement, and less as a causal factor shaping the gentrification process itself.

This paper seeks to interrogate the role of state-produced racial- and territorial stigma in the gentrification process and in struggles against gentrification. Specifically, I examine the case of the immigrant-dense and heavily stigmatized working-class district North-Neukölln located in the south of Berlin as a local instance of financialized gentrification. The area was long considered ‘too bad for gentrification’ (Smith in MieterEcho324 2007, p. 10). However, while the borough of Neukölln is still one of the poorest in the city,¹ rents have increased by 150 percent, which is the highest increase in the capital (Kluge, 2019). Buying prices have tripled and ‘financialized landlords’ -who August & Walks (2018, p. 124) define as ‘real estate investment trusts (REITs), private equity funds, financial asset management firms, and other investment vehicles’- play an increasing role in the acquisition, renovation and selling of housing (Langowski & Weiss, 2018). This has not been left unchallenged: in 2012, the Alliance for Affordable Rents Neukölln (hereafter, Alliance) was formed through the cooperation of various rental activists, local politicians and other housing initiatives. The goal was to bring the local district government of Neukölln to introduce an anti-gentrification measure that had already been applied to other parts of the city and would allow the government to intervene in excessive apartment up-gradings and exorbitant rent spikes. It took the Alliance more than three years to succeed, during which time rents in the North of Neukölln rose significantly above the Berlin average.

Given the blemished history of the district, the following questions are addressed: how do histories of racial and territorial stigmatization figure into the strategies of the local state in fueling, enabling and finally normalizing the gentrification process? How are then local struggles against state-enabled gentrification affected by the racialization and stigmatization of the neighborhood and the residents they aim to defend? More specifically, how did local state-driven and racialized territorial stigma shape the gentrification process in North-Neukölln and the resistance to it? My findings show that a focus on the state as a producer of stigma is useful to discern the social relationships that constitute the grounds on which gentrification and financial capitalism are flourishing. The findings also show that the oppressive classification (Tyler, 2015) of social groups within the working-class hampers resistance because it not only normalizes gentrification but also demobilizes local communities affected by displacement and displacement pressure. Accordingly, I argue that struggles against gentrification need to challenge abstract representations of space that reduce residents to liabilities and carefully deconstruct the ‘logic of difference’ (Fields & Raymond, 2021, p. 2) through which the accumulation of wealth operates.

The paper strives to make three contributions: first, it connects to the ongoing discussion on the role of race and racism in gentrification and financialization by considering the interplay of racialized and territorial stigma as an important ingredient of the current political economy of housing. Second, the paper adds to discussions on the role of the local state in the gentrification process by drawing attention to its role as what Çelik (2021) has called a ‘market maker’. I focus on the states’ role as a producer of stigma, suggesting that stigmatization is part of making markets. Lastly, the paper discusses the case of Germany, a country in which the nexus between colonial histories, race and neoliberal urbanism is understudied (Lanz, 2015). It thereby geographically expands the debate on race, gentrification and financial capitalism that is currently mostly led by North American scholars.

I begin with a brief discussion on the nexus between gentrification and rental housing financialization. This is followed by a discussion on the role of the local state in the de-/stigmatization process. After providing a short contextualization to Neukölln and Berlin and presenting the data collection and research process, I share my findings in three sections. The first two sections deal with the state as an agent of stigmatization and de-stigmatization, the last section is concerned with the resistance. The conclusion relates back to the question of class struggle and the main contributions of the article.

Theoretical framework

Gentrification and financialization

While financialization was first discussed in relation to home ownership and the related mortgage crisis (Aalbers, 2008; Rolnik, 2013), it now also leads to the involuntary inclusion of hitherto ‘untapped’ (August & Walks, 2018, p. 189) communities who live in affordable and often rent-regulated apartments (Bernt et al., 2017; Christophers, 2021; Crosby, 2020; Fields, 2015; Fields & Uffer, 2016; Lima, 2020; Teresa, 2019). The financialization of rental housing does not always lead to gentrification, but the two processes are intimately connected: first, with the gentrification of the center, low-income tenants are pushed to the outskirts of the city (Wyly et al., 2010). Left with little other options, financialized landlords can then ‘squeeze revenues’ from them (August & Walks, 2018, p. 124) either through methods such as incremental rent increases, an increase of ancillary costs or by investing little in the building substance while still cashing in rents, often paid through welfare transfers (Bernt et al., 2017). Living conditions then deteriorate even without displacement. Second, gentrification itself is taking a financialized form. Rent gaps, the gaps between the capitalized ground rent and the potential ground rent (Smith, 1979), are globalized in that local housing markets are assessed and speculated on in relation to an ‘abstract international rent level’ (Calbet i Elias, 2017, p. 169) rather than understood in relation to local demand (Lees et al., 2008). Accordingly, parts of the city might experience super gentrification (Lees, 2003) or a rent gap might open in ungentrified neighborhoods due to privatization, deregulation and the lifting of social protections (Teresa, 2019).

Both strategies -squeezing and gentrification through the closure of newly found rent gaps- must be read in conjunction with the marginalization of already vulnerable communities, such as the elderly, the disabled, mentally ill people, drug users, single mothers and racialized minorities. Discussions on financialization, however, remain largely detached from histories of social, political and economic oppression, particularly in the context of European welfare states (for a recent discussion in the North American context see Fields & Raymond, 2021). The next part of the theoretical section is concerned with this gap and in particular engages with the relationship of gentrification, racialized territorial stigma and the local state. I suggest that an analysis of the role of the local state in the financialized gentrification of affordable rental housing is pivotal to further our understanding of how the exploitation of urban space by finance capital is enabled.

Enabling gentrification: the role of stigma

While current gentrification processes have gone global, they still ‘need to be understood as the injection of a broader, global logic into a specific local political context’ (Thörn & Holgersson, 2016, p. 680). Whether described as ‘state-led’ (Hackworth & Smith, 2001) or ‘state-enabled’ (Aalbers, 2019), scholars have shown that it is particularly the local state -the municipality and subsequent scales of government- that has retained a key role in orchestrating gentrification (Bernt, 2012; Olsson, 2018; Paton & Cooper, 2016; Slater, 2017). Dwelling on the role of the ‘market maker’ in the case of Turkey, Çelik (2021) has, for example, shown that the state is more than a handy helper in gentrification-inducing urban regeneration projects. It not only deregulates and retrenches from existing social protections but institutionalizes the financialization of the housing market through strategies such as land enclosures, revenue-sharing and, coercion.

An important ingredient to the latter is the stigmatization of residents and the places they inhabit. The conceptualization of stigma in urban sociology and geography is often based on Loic Wacquant (1993), who coined the notion of territorial stigmatization, i.e. a distinct form of stigma that is attached to place and functions independently from other forms of blemish. I follow other critical scholars by understanding stigmatization, also in its territorialized form, as intertwined with existing systems of oppression. More specifically I understand stigma as part of racial capitalism (Robinson, 2000) in that it works to maintain and deepen the racialized hierarchies that enable dispossession, exploitation and coercion (Loyd & Bonds, 2018; Scambler, 2018; Slater, 2017; Tyler, 2015; Tyler & Slater, 2018). It is this multilayered view of stigma as both -territorial and racialized- that allows for a more nuanced discussion on the relationship between territorial stigmatization, gentrification and the role of the local state:

It has been well established in gentrification studies that state institutions and agents produce and reproduce stigma to normalize gentrification and trifle resistance (Crosby, 2020; Slater, 2016, 2017; Slater & Anderson, 2012; Thörn & Holgersson, 2016). The interplay between racial and territorial stigma, however, is less debated. As Pinkster and colleagues (2020), for example, maintain, while stigma can in fact be territorial, referring to a whole neighborhood or district, it typically sticks more heavily onto some bodies than others. This also means, that experiences with stigma within a neighborhood differ widely, i.e. the burden and emotions associated with territorial stigma are unevenly distributed across the ‘territory’. This can, for example, mean that the blemished home address affects a person of color more negatively on the job market, than a person whose ethno-racial identity is not otherwise stigmatized. The latter person might be perceived as living in a blemished place but not as being of that place, in the sense of not carrying its alleged characteristics (i.e. migrant, black, Muslim…).

For the state this distinction is significant: the uneven distribution of stigma within a neighborhood allows for the justification and explanation of inequality as a ‘neighborhood effect’ (Slater, 2013) that is not related to issues such as housing quality, affordability or the gentrification of other parts of the city, but rather connected to ‘cultures of poverty’ perpetuated by certain behavioral patterns, that need to be broken with adequate interventions. Financial capitalism, in turn, thrives on the juxtapositions created through stigmatizing discourses because it is based on social hierarchies, without which accumulation through dispossession is not possible (Harvey, 2005). Unlike past primitive systems of accumulation, finance obfuscates the social relations that sustain it through abstraction, i.e. by relating to urban space and its lived experience through automated systems of risk and value assessment (Ashton, 2012; Fields & Raymond, 2021, p. 2; McElroy, 2020).

To extract value from space, however, another step is necessary, that is less discussed in the gentrification literature: de-stigmatization.

Lifting the veil: de-stigmatization

Schultz Larsen & Delica (2021) have described the contradictory role of the state in the stigmatization process as ‘policy schizophrenia’. They discuss, for the case of Greater Copenhagen, how the stigma produced on the national scale (through Denmark’s infamous ‘ghetto policies’) is matched by area-based interventions on the local level that aim at de-stigmatizing neighborhoods and thereby, sometimes intentionally, sometimes unintentionally trigger gentrification processes because they leave larger structural problems, such as housing inequality, un-tackled. Mösgen et al. (2019) show that de-stigmatization is difficult because stigma is so pervasive. By drawing on the example of Frankfurt-Ostend, they illustrate that despite the states earlier interventions such as buying privately owned land and merging it into larger packages attractive to investors or the redirection of traffic, the long-standing stigma attached to the neighborhood created an ‘inertia’ (p. 428) that kept Ostend ‘ungentrifiable’ up until the mid-2000s. The relocation of the European Central Bank building to the neighborhood then finally brought change by symbolically annexing the area to the financial center of Frankfurt.

I would suggest that strategies of stigmatization and de-stigmatization can also take place on the same scale, i.e. the local state can do both at once. While this seems contradictory, it is not: territorial stigma is part of the movement of capital and correlates with cycles of dis- and reinvestment (Kallin, 2017; Kallin & Slater, 2014). It is crucial not only to justify interventions but to construct the symbolic and material structures that enable the extraction of value. The question is how exactly stigmatization and de-stigmatization can be applied simultaneously, on the same scale of government: for this, it is again analytically and empirically useful to make a distinction between the stigmatization of residents and the stigmatization of territories (Loyd & Bonds, 2018). Both clearly overlap; however, at the onset of a gentrification process, or attempts to fuel gentrification, it seems that residents remain stigmatized while their neighborhoods are reimagined as potentially ‘different’. Kallin (2017, p. 103) describes this as the juxtaposition between a ‘denigrated present and the promised future’. In this future, the place is frequently reimagined without or are least with only a portion of its original users. Social mixing is a key term here that is not only a euphemism for gentrification (Lees, 2008) but loaded with dominant believes around, on the one hand, the rightful owners of (potentially valuable) urban space and the, on the other hand, insufficiently integrated and potentially dangerous present inhabitants (Mösgen et al., 2019; Smith, 1996; Thörn & Holgersson, 2016).

The empirical section of the paper follows the structure of the theoretical section. The first part engages with the role of the Neukölln district government in producing and reifying the stigma around the district and in attaching it, not exclusively, but primarily, to racialized residents and their alleged practices and behavioral patterns. The second section describes attempts of the district to de-stigmatize the area, in connection to attempts to fuel gentrification in the North of the district. Here I show how, particularly in the early stages of a gentrification process, stigmatization and de-stigmatization produce ‘moving targets’ in that residents and the places they inhabit are selectively associated and disassociated from each other. This leads to a series of interventions, some of which aim to enable the influx of better-off residents and capital and others which aim to disable the visibility and practices of racialized residents, to whose bodies the stigma so heavily sticks to. The last section of the empirical part then discusses the consequences of this dialectical interplay between territorial and racial stigma for local movements. I show that an analysis of the discourses and responses of the local state, rather than of the financialized landlords themselves, allows us to discern the oppressive classifications that finance capital subsequently reinforces and exploits. Before moving on to my own findings, however, I will first describe the context in which the case of North-Neukölln is embedded.

Contextualising Neukölln

Gentrification is a multiscalar process that cannot be explained solely on the neighborhood-level (Teresa, 2019). While I will mainly focus on the actions of district government of Neukölln and the local struggle in the empirical section of this text, a summary of the global, national and metropolitan developments that have finally led to gentrification in North-Neukölln is necessary:

During the decades Berlin was divided, capital flew to the west of the country, making cities such as Frankfurt, Stuttgart or Cologne hubs of financial and industrial activity and turning the German capital into a relative outsider to the European economy. Accordingly, Berlin, after reunification in November 1989, was considered an undervalued market with a glaring rent gap on the European and global scale (Calbet i Elias, 2017). There were manifold attempts by the local government and national government to ‘reinvent’ (Colomb, 2013) Berlin as Mecca for tourism and investment, including large renewal and reconstruction projects across the inner city as well as a rapid disinvestment in public and socially subsidized housing leading to an equally rapid financialization of Berlin’s housing market throughout the 1990s and 2000s. Given that over 80 percent² of apartments in Berlin are still for rent, this was a clear case of rental housing financialization (Fields & Uffer, 2016). A third of rental apartments are today owned by professionally operating landlords. After reunification Berlin also experienced several waves of gentrification (for a map of Berlin see Figure 1).

Figure 1. Map of Berlin.

A first wave started with public subsidies to renovate the private housing stock on the eastern side of the wall right after reunification, particularly the districts of Prenzlauer Berg (Pankow) and Mitte. Today these areas are experiencing ‘super-gentrification’ (Lees, 2003), i.e. a reopening of the rent gap through new-built gentrification. Neukölln’s neighboring borough Kreuzberg had already been symbolically gentrifying in the late 1980s when it became attractive to urban pioneers (Lang, 1998). However, the process only took off after rent regulation policies that the district had put into force in the early 1980s lost ground in the 1990s (Holm, 2006, 2013). These two instances of gentrification already led to a considerable shift in the city’s ethnic and racial demography with western European, North American and Argentinian migrants increasingly replacing Turkish, Arabic and other eastern European migrants in the capital’s inner city (Holm, 2013).

At the same time, from the 1980s up until the mid-2000s, the German state weakened other social protections: subsidies for housing were reduced and subsequently halted, municipal housing companies lost their tax exemption privilege and unemployment benefits were reduced and linked to work-for-welfare (workfare) measures. These reforms must themselves be contextualized within European-wide developments at that time in which more countries were moving their welfare systems towards a ‘no right without responsibilities’ approach (Dwyer, 2004). The UK and policies and discourses promoted within the framework of Labour’s ‘third way’ were at the forefront of this trend. Interesting is how these ideas have then travelled across borders (Peck, 2002; Peck & Theodore, 2001) and penetrated different segments of the welfare system in Germany in different ways (Lodemel & Moreira, 2014). While claims to unemployment benefits were bound to a series of conditions, such as having to apply to and accept a wider range of job offers (even below one’s qualification) or having to perform tiresome manual work in exchange for extremely low pay, access to housing and tenure safety were affected in distinct ways: the new unemployment and welfare regulations came with restrictions for housing for those eligible to receive housing benefits, for example regarding square meters and maximum payable rent (Holm, 2008). While Germany does not provide official numbers on evictions, Berner et al. (2015) have shown how in Berlin evictions, workfare and gentrification have since worked in tandem, with the unemployed and working poor being increasingly confined to the peripheries of the city, state-enabled through the often untransparent, classist and racist practices of unemployment agencies on the district-level. As I will discuss after presenting the data collection process and method, the local expression of these developments on the metropolitan, national and global scale are particularly pronounced in Neukölln.

Data and method

This paper is based on a case study of the Northern parts of Berlin’s working-class Neukölln district and combines different methods and data sources. The area lends itself to the study of territorial stigma, financialized gentrification and struggles because of its long-standing history of race- and class-based defamation and a rapid rent increase from the late 2000s onwards (Huning & Schuster, 2015; Kadioglu Polat, 2020). I draw on two phases of fieldwork and interviews in 2012/2013 and in 2019/2020, including living in North-Neukölln for almost five months in the first phase, in which there was no anti-gentrification regulation in place. Interviews were conducted with residents, who mainly had origins in Turkey. This was first due to my own ethnic and cultural background, which facilitated access and second because these residents were frequently the victims of the racialized territorial stigma attached to the district and thus qualified to report on how it affects them. This part of the research included 46 semi-structured interviews with long-term residents complemented by participatory observations and informal conversations. Moreover, five property owners were interviewed in late 2012. Respondents were chosen according to the snowballing system, where respondents recruit or recommend other respondents, or approached directly in shops, neighborhood houses or public events. Often, interviews were conducted in Turkish or bilingually, switching between German and Turkish. This provided not only flexibility in terms of catching subtle meanings but also established a more intimate environment between me and my interlocuters.

In both periods, 2012/13 and 2019/20, I variously interviewed housing/urban activists, project leaders, neighborhood managers, district planners, local politicians and authorities and representatives of tenant associations. These interviews lasted between 45 to 75 minutes and were either face-to-face or via telephone or Zoom Video Communications, a technology which this group of respondents had access to. The respondents, while by no means exhaustive, represent a selection of actors involved in governing Neukölln on the district and neighborhood-level or involved in local politics and planning. Accordingly, their narrations provide an overview of different, sometimes contradicting perceptions of Neukölln’s gentrification. A table of the interviews quoted in this article can be found in the Appendix. Interviews were complemented with an online document analysis encompassing yearly housing market reports by the Berlin Investment Bank (IBB) from 2000 onwards and documents, reports, brochures and publications produced by the Neukölln urban planning division, the district of Neukölln or representatives of the Neukölln government since 2000.

Neukölln

Stigmatizing Neukölln: race and territory

By the mid-2000s Neukölln was considered to be among the ‘losers’ (Krätke, 2004, p. 61) of the wider economic growth of Berlin. Attested to have ‘a most spectacular concentration of social problems’ (Ibid.), a study in the late 2000s suggested that the poor from other, already gentrifying inner city districts, were displaced to North-Neukölln, sending the area into a rapid downward-spiral (Häußermann et al., 2008). A report by the Berlin Investment Bank (IBB) –a development bank and central promotional institute of the state of Berlin- in 2006 found that a lack of social mixing and the presence of social housing estates lowered the demand for higher-priced rentals in Neukölln (Investitionsbank Berlin 2006, p. 6). The absence of valorization was matched with a racialized narrative about Neukölln that told a tale of two districts: before reunification in 1989, the area is collectively remembered as a ‘respectable working-class borough’ mostly inhabited by the indigenous German working-class (Soederberg, 2017, p. 482). After reunification, so it is argued in hindsight, the area’s real social demise begins with the influx of the ‘welfare-dependent class’. This narrative was also reproduced by former long-term mayor of Neukölln, Heinz Buschkowsky (2001–2015):

In my view a lot in the present can only be understood under the current paradigm shift: away from self-responsibility to the expectation that the state carries the responsibility for the welfare of the individual and must satisfy their needs (Buschkowsky, 2013, p. 49, translation mine)

While residents in the district were in general described as dependent and undeserving – very much in line with the tone of Germany’s neoliberal welfare reforms-, Buschkowsky singled out migrants as particularly problematic due to their perceived misuse of public space:

When I today ask people at which point, they realized [the changes in North-Neukölln] and have found them to be negative and bothering, they always name the period from the early to the mid-1990s. For the majority-society [a term commonly used to demarcate ethnic Germans] uncommon behaviors became evident. And even if it was only migrant families that identified soccer fields as ideal places for picnicking and only unwillingly left when training commenced at 4 PM.³ (Ibid., p. 55, translation mine)

Soederberg (2017, p. 483) challenges this often-repeated narrative of Neukölln’s post-reunification demise by showing that unemployment and poverty were pervasive in the district until the mid- to late 1950s, while other parts of west Berlin were already thriving by 1950. Neukölln, accordingly, had been a ‘problem’ long before the influx of immigrants. When the borough, in tandem with the German economy, reached full employment in 1970, labor shortages were filled with recruited workers from southern and eastern Europe. Neukölln received an increased influx of migrants from the late 1970s onwards because migrant workers were facing discrimination by landlords and were banished from other parts of the inner city by the local Berlin government⁴. The result was that they had not much choice but to move into the most ill-maintained housing, which could be found in North Neukölln (Schönwälder & Söhn, 2009):

There was a planned ghettoization. Sometimes they say, ‘why did you Turks ghettoize’?

No, we did not do it. (Interview 1 with tenant)

You have to understand under what circumstances these people [Turkish and other migrants] came to Neukölln. These people lived in houses no one wanted to live in, with toilets outside on the floor, water outside, no heating. (Interview 2 with social worker)

What Baeten (2001, pp. 64–64) has claimed for the case of Brussels, thus rings true for Berlin: while the white middle-class and part of the indigenous working-class abandoned Neukölln in the decades before and after reunification, migrants populated the area, thereby ensuring ‘the city’s very reproduction’. This history, while well remembered by residents, is omitted and re-narrated by the local state. From the 2000s onwards the presence of lower-income immigrants and their families was explicitly linked to absent valorization process in the district and the high vacancy rates:

Through the increasing share of foreigners⁵, or foreign fellow citizens who had already been living [in the neighborhood], retailers, who are often old established, feel bothered. Prospective buyers and visitors might distance themselves from the location. Walk-in customers and even the steady clientele might stay away. Through renting apartments to foreign fellow citizens, the demand in the neighborhood of course changes, people with different origins have other eating- and lifestyle habits. (Quartiersmanagement Reuterkiez [neighborhood management Reuterkiez-Neukölln] 2002, pp. 12–13, translation mine)

The stigmatizing narratives here perpetuated by the former mayor as well as other local state agents must be read in conjunction with the wider European, and even global, trends in social and urban policy, in which local communes have been left with little other options than to enter in not only metropolitan-wide, but national, regional and global competition. As the shift towards workfare in Germany and elsewhere signals, the roots for urban poverty and disinvestment are increasingly sought on the individual or social group level. Responsibility is accordingly transferred to lower scales of government who are then commissioned to ‘deal’ with these ‘problematic populations’ (Brenner, 2000; Dikeç, 2006). This is not to say that local state agents do not hold responsibility for reifying and reproducing stigmatizing narratives (they do!), or that there are no challenges to these narratives among state agents, but it is important to note that these discourses emerge within a wider context and are -as gentrification itself- a multiscalar product (Schultz Larsen & Delica, 2021).

What can be discerned from these excerpts, is that while Neukölln as a whole was territorially stigmatized, in the sense Wacquant (1993) and others have used the concept, the stigma has also been more heavily attached to migrant residents (Pinkster et al., 2020). Accordingly, while the stigma is territorial it is also selectively detached from the territory and shifted unto some social groups as to articulate the possibility for the yet-missing gentrification of Neukölln: working through a ‘logic of difference’ it is not-so-subtly insinuated that Neukölln, or at least the more centrally located North of the district, could become a ‘better’ place only if less ‘foreigners’ or ‘foreign fellow citizens’ would live there.

Destigmatizing Neukölln: enabling and disabling tactics

From the early to mid-2000s onwards the district government engaged in several interventions to lift the material and symbolic barriers that seemed to keep North-Neukölln from following the developments in Kreuzberg. As indicated by the title of this sub-section, these interventions are a bundle of enabling and disabling tactics. A first step, in 2005, was to temporarily broker vacant spaces to creative workers, associations and small gastronomies. Known as a global strategy to attract the so-called creative class, interim use, is a seemingly soft strategy that is aimed at kicking off a symbolic gentrification process (Colomb, 2013):

At the beginning there were also film makers with Turkish background or after-school programs [programs often used by migrant children] that wanted to use these spaces. However, in mid-2007 we said we must stop with the vacancy management here, because the real estate business realized that they could call this place Kreuzkölln and could raise the rents […]. The second part they should do by themselves, because our role, as users of public money, it can only be to initiate processes that do not start by themselves. We saw that the real estate business had learned and is profiting, so they should do it by themselves. (Interview 3 with project leader)

The dubbing of North-Neukölln as Kreuzkölln was a sign that gentrification was looming. The moniker discursively disassociated the area from the rest of the blemished district bringing it symbolically closer to Kreuzberg:

There was a functioning co-habitation in Neukölln for a long time with migrants. But no one wanted to voluntarily move here. The first pioneers [early gentrifiers] who came to the very North, said ‘Kreuzkölln’. They were ashamed of Neukölln! (Interview 4 with Alliance member)

By the early 2010s, in conjunction with the general gentrification of the city (Holm, 2013), the very North of Neukölln showed rent increases above the Berlin average (see Figure 2) and the district was increasingly mentioned together with Kreuzberg as the new Berlin ‘ghetto chic’ (Roxborough, 2011).

Figure 2. Average asking rent increase per sqm (in Euros) 2008–2014. Comparison of Neukölln’s Northernmost neighborhood Reuterkiez and Berlin. (Source: Graph redrawn by author based on data by Bezirksamt Neukölln 2016).

But a problem remained from the perspective of the district: big capital stayed away.

In 2011 an urban regeneration project was initiated on Neukölln’s main shopping street, Karl-Marx Strasse. One of the project goals was the marketing of ‘key estates’ such as vacant department stores and the old postal building, to investors. Part of this marketing was also the production of a magazine titled Broadway Neukölln:

We were criticized for producing high gloss pictures that have nothing to do with Neukölln. We discussed this in length, we want to lure investors to Neukölln. Why would anyone buy the empty C&A building [department store chain] here, only because some hip boutiques have now settled here in some side streets? That has changed the perception about Neukölln, but it does not amount to anything if the big buildings remain empty. I must deliver him [the investor] a picture of Neukölln that is more representable towards the outside, I must show him the strength that Neukölln has, namely relatively moderate land price, a purchasing power that is a little lower but, for that, a relative high rent level. So, for that, you must also promote the soft skills, come to Broadway Neukölln, it’s happening here, here is culture, here are young people, buy the C&A building and make a chic palace out of it. (Interview 5 with project leader)

The strength of Neukölln was not defined through its present residents and users but through it yet-undiscovered rent gap that was to be realized through newcomers and prospective residents. Today some key estates are owned by private equity and real estate investment companies that, according to the magazine, cater to the ‘“new” Neuköllners’ that are described as ‘young, creative and smart target group’ (Broadway Neukölln, 2016/17).

But financialized gentrification is not only about attracting people and investment but also repressing those social groups and practices that do not fit within a marketable vision of urban space. On the harder side in Neukölln were measures such as increased policing in front of schools, the securitization of public spaces and dispelling of unwanted users such as drug users and migrant youth (Eick, 2003, 2006). Kollender (2020) has, for example, reported that the vast majority of policed schools in Berlin is in Neukölln and that particularly migrant parents are subjected to racial profiling when picking up their children. Stigma is selectively reinforced through these practices. Places, such as public schools, that are perceived as particularly problematic are thus not only discursively but spatially singled-out (Eksner, 2013).

Institutions of the local state also facilitate evictions through the ways they chose to allocate resources to welfare-recipients. As Holm (2008) finds, one problem with the neoliberal reforms of the German benefit system are the often untransparent and inconsistent handlings of individual communes and unemployment agencies (since the reforms called ‘job centers’). For Neukölln residents this has been consequential. With about a third of Neuköllners receiving public benefits, the local job center is the biggest in Germany. It has been repeatedly charged with unnecessarily restrictive interpretations of existing regulations for housing benefits:

The regulation for housing expenses from the Berlin Senate has two paragraphs that are somewhat contradictory. This is the ten percent clause. It means that it gives job center agents the leeway to top up housing benefits up to ten percent. The job center Neukölln choses the strict ceiling and never shows this kind of tolerance. (Interview 6 with social worker)

Moreover, Neukölln is the district with the highest rate of rejection for the assumption of rental debt. A staggering 85 percent of petitions to job centers by parties unable to cover their rents are rejected, compared to 47 percent on the Berlin average (Berner et al., 2015, p. 59). It is not clear in how many evictions this results because the Neukölln job center does not transfer these numbers to the district. On the one hand much of the job center practices are related to being chronically understaffed, a result of austerity politics (Berner et al., 2015, p. 60). However, on the other hand, the level of benefits is structured by the relationship of individual case managers with their ‘clients’ (Soederberg, 2017, p. 487). These, in turn, are structured by racialized and sensationalized representation of criminality and illegality: the Federal Agency for Employment (BA) in 2020, for example, crafted an internal working-guideline for ‘Fighting the clan-like welfare-abuse in connection with the Freedom of Movement within the EU’ (Deutscher Bundestag, 2021). This guideline is targeted at migrants from Bulgaria and Romania, many of whom arrived in Neukölln after the latest EU enlargement in 2007. Finally, housing companies owned by the state of Berlin, operating in North-Neukölln, have displayed explicitly racist letting practices that have exacerbated the displacement pressure on migrants in the district. A statement of the year 2000 by the managing director of a publicly owned company that operates social housing, illustrates this:

When Germans always see foreign names on doorbells, then this is perceived as bothering. Our practice corresponds to the expectations of the German population (Managing Director of Stadt und Land on their letting practices in a social housing estate in North Neukölln, cited in Eschrich, 2000)

These practices accordingly have constricted the choices of welfare-dependent and working-poor migrants long before the actual gentrification in Neukölln started. In the longer-term they have facilitated the diversion and displacement of these groups to the peripheries of the city (Soederberg, 2017; p. 480).

Stigmatization and de-stigmatization consist of different tactics that I have here classified as enabling and disabling. Enabled are flows of capital in the form of incoming better-off, white or non-racialized ‘new’ Neuköllners and in the form of finance capital. Disabled are flows towards poor urbanites, and in particular residents of color. De-legitimized and disabled are also their usages of public space and their consumption practices through policing, securitization and the preferential treatment of creative class businesses over working-class ethnic entrepreneurship. What is also disabled and delegitimized is resistance, as will be discussed in the next section.

Struggling against the norm

Already in 2010, a local politician and housing activist of the Neukölln Greens’ Party who later was elected as district councilor for constructions, issued his first petition for the enactment of an anti-gentrification regulation for North-Neukölln, namely the national law on the conservation of the construction features and the social composition of neighborhoods, also known as Milieuschutz (MS). An urban planning instrument from the German Building Code that dates to 1987, MS refers to the protection of the physical and social composition of an area. This protection makes it difficult for property owners and investors to convert rental apartments into condos and to implement so-called ‘luxury renovations’, such as adding a balcony, merging two adjacent apartments or adding a new bathroom. Since 2016, MS also includes a rental break (Mietpreisbremse) which determines that owners cannot raise the rent for new lettings more than ten percent over the determined neighborhood average. The use of the law has been significantly expanded in recent years, with Berlin being the clear forerunner in Germany with currently 58 social conservation areas, most of them concentrated in five central districts In Neukölln the law was only enacted in early 2016 and initially in only two neighborhoods in the North (Bezirksamt Neukölln, 2016). Neukölln by then was already the district with the highest rent increase in the capital and a rapid rate of condo-conversion. In this last part of the empirical section, I will discuss the local activists’ journey in North-Neukölln and the responses by the district through my understanding of the local state as a ‘market maker’ that selectively reinforces and alleviates stigma to produce gentrifiable neighborhoods.

The real impetus for the local anti-gentrification movement in Neukölln came from organized residents from Neukölln’s Northernmost quarter, which was the first to suffer from rent increase. The collective wrote an open letter to then mayor Buschkowsky in late 2012 to come up with a strategic concept to confront gentrification. The open letter was followed by the establishment of an Alliance for Affordable Rents Neukölln (hereafter, Alliance), that included residents, activists and party representatives (Interview 7). The SPD and the conservative Christian Democratic Union (CDU), however, rejected any demand for MS. Buschkowsky and the previous district councilor for constructions, Thomas Blesing, were at the forefront of this dismissal:

Buschkowsky and Blesing believed that it was finally Neukölln’s turn. Many were fleeing Neukölln when they had kids because there was so much rumpus here. The idea was that this would be a normalization process, an opportunity to catch up with other parts of the city. (Interview 8 with Alliance member)

As discussed earlier, Berlin was and to some extent still is considered an ‘undervalued’ city in the sense that rents have remained lower than in comparable European cities. Deregulation and privatization, as well as favorable legal conditions for landlords have in the meanwhile turned the capital into one of the most rapidly growing European real estate markets. Given that Neukölln only a few years earlier had been described as loser of this development, the ‘catching up’ must be understood as an attempt to actualize the rent gap that had been carefully articulated and widened through earlier interventions. In practice, this implied increasing the share of middle-class residents, through adequate branding and non-intervention:

we have always fought for people with a little money and education to move here. […] We wanted a healthy social mix. I think it is a colorful area. I will neither be like Nikolassee [wealthy, suburban area in Berlin] nor Prenzlauer Berg but these young people with money and education, contribute to normalization. (Blesing, quoted in Rossbach & Ochs, 2014)

The narrative of normalization as an argument against anti-gentrification struggles, displays the ‘logic of difference’ upon which accumulation of wealth is built. Neukölln could become normal, with normal residents, i.e. residents that fit into the dominant values of the self-reliant and responsible individual. Important is that it is agents within the local state that articulate these classifications and thus prepare the symbolic and material structures that real investment brokers, investors and landlords can employ to their advantage. On the one hand it becomes easier for them to sell and justify gentrification projects. On the other hand, they can also more easily argue against objections coming from the neighborhood:

Neukölln’s enormous potential cannot be described without mentioning the challenges that the district faces. In no other Berlin district do so many ethnic groups come together so closely; nowhere else in Berlin there is such a cultural diversity. However, what has long been interpreted as a weakness of Neukölln is increasingly turning out to be strength. The population’ s diversity is also expressed in a high level of acceptance for change.

The mega-district Neukölln is about to establish itself as a young, impulse-giving and powerful engine in Berlin. In Neukölln you can’t watch - you have to keep up. Developments are rapid and not gradual. And unlike before, no new parallel societies are developing, but a young, hungry business culture, from which the established population of Neukölln does not want to be protected, but to profit. Many people recognize the signs and understand that it is not about displacement, but about change. Investors plan coworking spaces and build the necessary apartments for people moving in. Orphaned parking garages are turned into offices, and game halls into functioning retail, catering, office or service structures. The vision for Neukölln is not a protected milieu, but a cosmopolitan, dynamic, real participating community. (Guthmann Estate, 2021)

The positive change implicated here echoes the racialized social mixing narrative by the district government that juxtaposes bad (parallel societies with little entrepreneurial spirit) and good forms (profit-hungry young urbanites) of diversity. But this change, in reality, implicates displacement. Already in the early 2010s a migration towards the peripheries of the city began:

We have a migration to the peripheries that is already discernable from the statistics of the job center. There is less unemployed now in Kreuzberg than in the [Eastern peripheries ] of the city where unemployment is rising. (Interview 9 with Berlin tenant association)

The problem from the side of many migrant residents in Neukölln was that they were afraid of moving to East Berlin, due to the threat of Neo-Nazi violence. The local job center, however, in the early 2010s, urged migrants with rental debt to do exactly that:

I cannot go from here and go to Pankow or Marzahn [Eastern districts]. I can live here among the Arabs, Greeks and Bulgarians, there are conflicts too, but at the end we are the same, but I will not let my child be a victim of racism there. (Interview 10 with tenant)

The reaction of the district councilor lacked empathy; displacement was considered suboptimal but normal. Relocation had to be accepted. […]. Within some time-delay all other neighborhoods in Neukölln, within the commuter train circle, had to deal with the same problems. (Interview 11 with Alliance member)

Only after a petition with 3,500 signatures the district council voted against Buschkowsky and Blesing and decided to allow for a pre-study to determine whether MS was necessary.⁶ According to the Alliance, the pre-study itself was an unnecessary spending of financial means and time, since the situation was clear, and the area had already advanced to one with the most rapidly rising rents in Berlin. Independent assessors confirmed that ‘it was actually, already too late’, urging the Alliance ‘to fight for every day’ that would bring the enactment of MS closer (Interview 7). However, only a change of leadership -after Buschkowsky stepped down in early 2015 following a loss in popularity in the district- brought the Alliance a breakthrough (Interview 12&13). MS was finally approved in late 2015 and enacted in February 2016.

In the meanwhile, many migrants diverted to social housing estates in south Neukölln (Sethmann, 2019). The largest private social housing provider there, in turn, is owned by a real estate fund with seat in the United States and known for sharp rent increases after modernization (Trautvetter & Bonczyk, 2019, pp. 23–25). In other words: while some financialized landlords were betting to actualize the carefully articulated rent gap in parts of North-Neukölln through projects such as micro-living and co-working, others benefitted from the displacement of poorer residents to the south. Squeezing and gentrification-by-upgrading, as described by August & Walks (2018) are thus two exploitative strategies observable in the district. Squeezing is exacerbated by the fact that migrant residents have less options because they fear racist violence in other parts of Berlin and because they are discriminated by land-owned housing companies. Accordingly, the financialized gentrification process in Neukölln must be understood in conjunction with a racially stratified housing market.

Conclusion

In this article I bring together debates on gentrification, financialization and race through my discussion of territorial and racial stigma. I started off from the assertion that capitalism works through a ‘logic of difference’ (Fields & Raymond, 2021, p. 5) that is often understated or overseen in research on the political economy of housing and urban space. The process of financialization has increased the tendency to obfuscate the social and historical relationships that make the upward redistribution of wealth (Harvey, 2005) legitimate and possible because financialization works through abstraction (Fields, 2017; McElroy, 2020). Fields & Raymond (2021) have conceptualized this as a ‘death-dealing abstraction’ because financialization abstracts racism into digitalized and automated systems of risk and value assessment that are difficult to challenge because they appear removed from societal bias. I have suggested that a renewed focus on the local state can help us to concretize how violence and displacement exploit and reproduce racial hierarchies. This concretization is necessary to ‘politicize financialization’ and strengthen resistance (Fields, 2017). I have focused specifically on territorial and racialized stigma as part of a bundle of enabling and disabling tactics to legitimize and drive forward accumulative strategies that dispossess and displace tenants that live in affordable rental housing (Baeten & Listerborn, 2021, p. 122; Crosby, 2020). Wacquant (1993) conceptualized territorial stigma as a form of stigmatization that is relatively independent from other forms of blemish. This case study, however, has shown that while territorial and racial stigmatization overlap, even sometimes to an extent that they can hardly be distinguished, the local state may selectively disassociate the place from the people when it wants to fuel a gentrification process. It is in this way that the neighborhood or district can be reimagined as a better (or better-off) place without, or only a portion of its original users (Kallin, 2017).

I have also shown that this form of selective disassociation trifles resistance in that activists and residents are held back by the oppressive categorizations that not only normalize gentrification but empower financialized landlords: private actors capitalize and exploit existing inequalities and pick up racialized narratives co-produced by the state. Challenging these narratives would necessitate to include the experiences and perspectives of those most heavily targeted by the stigma, which, according to Alliance representatives, as well as racialized residents remains a problem in Neukölln:

We have a mobilization problem. There is an alienation among the youth especially. There is no politicization among the youth in Neukölln. This starts in preschool, because it is hard to find a place and at that point already a ghettoization process begins. There is such a mistreatment in schools that the kids become demoralized, they want to get away. This also drives displacement. (Interview 12 with migrant activist)

We must have a much clearer discourse that links anti-racism and urban politics. At the moment these two issues are still regarded as fairly distinct. We must, for example, interrogate why there are more [heavily armed] police controls of shisha bars and migrant-owned corner shops in Neukölln than in other places around the city where more drugs are going around. (Interview 13 with Alliance member)

We are nowhere close where we want to be in regard to inclusion. Many activists in Neukölln are also newcomers and many who were later engaged only moved their arses once they were affected. We have a responsibility to solidarize with the long-term residents. (Interview 7)

Wacquant (1996) has noted that territorial stigma not only leads to personal disadvantage but disintegrates communities. Risager (2021) in the context of financialized gentrification, in turn, has recently argued that the reality of uneven urban development forges and necessitates a political re-composition of working-class struggle that bridges the divides between social groups that experience their societal subjugation in distinct ways. As Tyler (2015) has aptly put it, classificatory struggles are part of class struggle and must be recognized as such. Accordingly, urban struggles that aim to ‘crack’ financialization and gentrification are confronted with a complex challenge in which they need to render visible and possible ‘reverse-engineer’ (Rameau in Cowen et al., 2012, p. 952) oppressive discursive technologies that reproduce and shape the unequal development of cities.

Acknowledgements

I am grateful to comments on earlier versions of this article by Mustafa Dikeç and Carina Listerborn. I would also like to thank Özlem Çelik for her guidance and the valuable comments by three anonymous reviewers, all of which have helped to improve this paper substantially.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This research was funded by the Swedish Research Council for the Environment, Agricultural Sciences and Spatial Planning (FORMAS), Grant Number 2020-01739.

Notes on contributors

Defne Kadıoğlu

Defne Kadıoğlu is a researcher at Malmö University’s Institute for Urban Research at the Urban Studies Department. She conducts research in the field of housing inequality, racial and territorial stigmatization, gentrification and urban policy.

Notes

1 Neukölln has an unemployment rate of about 12 percent (8 percent in Berlin) and an underemployment rate of 16 percent (10 percent in Berlin) (Statistik Arbeitsagentur, 2019).

2 This is a slight decrease from previous years, but it goes without saying that the share of rental is still exceptionally high, irrespective of the cities we compare with (Fields & Uffer, 2016).

3 A small, yet important, detail is that youth soccer is widely popular among migrant children in Germany, particularly Turkish migrants who are the largest ethnic minority in Neukölln. Describing migrant families as ignorant towards soccer training is all the more baffling, especially when referring to a time when many families had been in Germany for decades already (Heinrich-Böll-Stiftung, 2006).

4 From 1975 until 1990 Turkish, Yugoslavian and Greek nationals were not allowed to move to the central boroughs of Kreuzberg, Tiergarten and Wedding to avoid ethnic concentration.

5 Despite having been home to immigrants for a long time, at least until recently, even Germans with immigrant parents were colloquially referred to as ‘foreigners’, typically irrespective of citizenship.

6 Only two neighborhoods, Reuterkiez and Schillerkiez, were considered in the pre-study, while the Alliance had demanded protection for North-Neukölln neighborhoods (eight in total). MS was only extended in 2019 to the whole area, after mayor Buschkowsky and district councilor Blesing were replaced.