Property-led renewal, state-induced rent gap, and the sociospatial unevenness of sustainable regeneration in Taipei

Abstract

Property-led renewal has become the mainstream approach of entrepreneurial governance but may change the sociospatial pattern of the classical rent gap and cause problems such as neighborhood commodification, overlooked public interest, and uneven development. Considering the extensive application of marketized measures such as the floor-area-bonus and right transformation in Taipei’s urban renewal system, we explore the role of the state in rent gap production and the obstacles to realizing sustainable regeneration. The legislative framework indicates that urban renewal in Taipei has prompted growth network among property market, property-led incentive, and stakeholders to exploit the state-induced rent gap. From the micro-level, we select two cases in the old and new districts in Taipei for comparison and find that the sociospatial unevenness has not been balanced but intensified by the property-led renewal since the 2000s. Profit-making has engendered a governing barrier detrimental to implementing sustainable regeneration while distorting the publicity to property appreciation.

KEYWORDS:

• Property-led urban renewal
• state-induced rent gap
• neoliberal urbanism
• gentrification
• sociospatial unevenness

Acknowledgements

Authors appreciate the assistance from the Ministry of Interior, Taipei City Government, property practitioners, community planners, and academic institutes for expert interviews, opinion consultations, and data investigations. An earlier version of this paper was presented in the Asian Urbanization Conference 2018 at the King Mongkut’s Institute of Technology Ladkrabang, Bangkok, Thailand. We especially thank Professor Anne Haila’s comments at that conference. Her valuable opinions from her lifetime inspired our study. We regret her passing in 2019. In addition, we thank the suggestions from all reviewers. Your viewpoints indeed help us to revise our research better. We have learned a lot from all of you.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 According to Turok (1992), property-led renewal refers to the assembly of finance, land, building materials and labor to renovate or improve buildings for occupation and investment purposes that place building and property (re)development on the central agenda of economic regeneration of cities to promote urban environment, sense of places, and, the most importantly, positive economic benefits.

2 For example, Clark (1987, 1988), on the basis of his empirical test in Malmo, has inferred that the rent gap may not appear until after a long period during which the PGR and CGR have little disparity. He has argued that the practical circumstance of rent gap production is more complicated than the concept of rent gap theory proposed by Smith. Continued urban expansion, government policy, and landowner maintenance in the early and middle stages of a building cycle are the factors increasing the PGR and CGR and delaying rent gap production.

3 TDR has been referred to as a floor area bonus by Lee (2012) and Lan et al. (2015). Herein, we adopt the concept by Lee (2012) and Lan et al. (2015).

4 The composition of V2 is complicated because of the involvement of multiple stakeholders. In the urban renewal system of Taiwan, the original residents of an old community can choose to stay at or to leave the place after renewal. The participants staying at the place can get their right values proportionately in terms of a new property (R1). Others leaving out can obtain the compensation by cash (R2). In addition, the implementer, usually the developer, needs to acquire an enough net profit (π) after recovering the common expenses invested in the renewal process (P) (i.e. π = P − C > 0).

5 From a critical perspective, creative destruction means the constant tension of modernist urban projects because no new world can be created without destructing an old one (Harvey, 1989). As part of neoliberal planning procedure, urban renewal or regeneration also manifests the process of creative destruction (Fenster, 2019). In the dynamic of property development, creative destruction represents the reconstruction of built environment with the cyclical building obsolescence, refurbishment, and valorization owing to the rent gap in an inner city (Bryson, 1997).

6 Spatial fix is a concept addressed by David Harvey to express the function of space to alleviate the capitalist crisis of overaccumulation. ‘Fix’ is an equivoque. First, it refers to ‘something being pinned down and secured in a locus; second, it means ‘to resolve a difficulty’ (Harvey, 2001, p. 24). That is, surplus capital from general productive sectors can be switched into the built environment or the capitalist crisis can be transferred from an overaccumulated place to a fresh one that crisis has not yet happened (Schoenberger, 2004). As the mobile capital fixes into a specific location, it encounters the geographical rigidity and will remain for a long period before its physical devaluation (Napoletano et al., 2015; Narsiah, 2013; Schoenberger, 2004).

7 The former signifies that the developer can inflate common expenses over the actual development cost; the latter signifies that the developer tends to underestimate the value of the property after renewal (Yang & Chang, 2018, p. 16).

8 In the context of modern capitalist cities, the landowner class has the power to reclaim the positive return as they are willing to sell or rent the land they own to others for use. Moreover, the speculators or developers are also important agencies for realizing monopoly rent because they pursue a higher return on investment, which is the premise to initiate capital switch from primary circuit to secondary circuit (Harvey, 1974, 1978).

9 ‘Network’ refers to the agencies of property development that are not only limited to the elitist rentiers of the property industry but also extended to the public concerned with the valorization of their properties (Gottdiener & Hutchison, 2011).

10 In the urban renewal system of Taiwan, the state-induced rent gap can be separated from the total rent gap because the appraisal report of a renewal business can list the original floor area and the extra floor area from the incentive mechanism. In this report, the valuation company has to detail for the right values before and after renewal to allocate the cost and benefit to stakeholders. Thus, the right value of the extra floor area in a renewal business can be seen as the state-induced rent gap awarded by the floor-area-bonus.

Additional information

Funding

The authors have greatly appreciated the grant support from the Ministry of Science and Technology (MOST 104-2014-H-305-061_MY3) of the R.O.C.

Notes on contributors

Cassidy I-Chih Lan

Cassidy I-Chih Lan is an Associate Professor in the School of Resource and Environmental Science, Quanzhou Normal University, China. He is a scholar with expertise of spatial planning, sociology, and human geography. His research interests include urban and regional governance, urban regeneration, spatial political economy, and urban geography.

Chen-Jai Lee

Chen-Jai Lee is the Professor of Real Estate and Built Environment, National Taipei University, Taiwan. He concerns land problems in Taiwan, such as land use policy, land taxation system, rural development, and land economics.