“Where to put the spare cash?” Subprime urbanization and the geographies of the financial crisis in the Global South

ABSTRACT

This article investigates the geographies of subprime urbanization, and by extension, the displacement of 2007–08 financial crisis to the Global South. Previous research examined the formative ways that technological innovations enabled mortgages to deterritorialize and circulate on secondary markets. Less is known about how cities with underdeveloped financial systems and housing markets have been impacted. The case of Tangier, Morocco, is used to argue that the geography of the crisis must be understood as a particular mode of urbanization, subprime urbanization, predicated upon the creation and exploitation of housing submarkets into new geographical frontiers. Subprime urbanization emerged in Tangier in response to the historic contradictions of regional disinvestment in northern Morocco. Weak financial inclusion for local low-income homebuyers led State bureaucrats to increasingly use housing policy to encourage European investment into Moroccan property markets, thereby transforming policy away from improving homeownership access and inclusion toward an urban model centered on the logics of international property speculation.

KEYWORDS:

• Subprime urbanization
• financial crisis
• Europe
• Morocco
• Global South

Acknowledgments

The authors would like to thank Mark Davidson, Elvin Wyly, Kevin Ward, Kelly Kay, Alan Wiig, and the anonymous reviewers for their comments on previous versions of this paper. Any faults are the authors’ alone.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Values are equivalent to historic exchange rates. Data for investment prior to 2002 were not available.

2. We were unable to use data for the years 2005–2009 due to capture error in the imagery.

3. The average mortgage value was calculated by dividing the total number of mortgages registered in Tangier by their total value. The Moroccan “median of regions” was calculated by dividing the median regional value of Moroccan mortgages by the median number of regional mortgages registered.

4. All names have been changed to protect confidentiality.

5. Although beyond the scope of this article, the liberalization of the Moroccan property market cannot be viewed apart from the State’s long-standing struggle against political corruption and organized crime. The property market has functioned as a major vector for money laundering and other illicit activities. Since the 2000s, drug cartels and other syndicates have increasingly mediated market access through the State’s promotion of public–private partnerships with property investors and developers (Lahlou & Ksikes, 2008).

6. GDP per capita in 2005 was $34,800 in France, $26,500 in Spain and less than $2,000 in Morocco.

Additional information

Funding

Research was supported by a short-term research grant provided by the American Institute for Maghrib Studies, 2012.