WHAT IS GENTRIFICATION?

Gentrification is a process that affects a large number of cities around the world, and involves urban and social transformation in some areas. The replacement of the urban population by the so-called "non-population", alluding to tourism, causes consequences in local businesses and services. Housing regulation is only one way to slow down this process of transformation of urban centres, but produces a big change in the long term. We define what gentrification is in a more extensive way just below!

The phenomenon of gentrification

Gentrification is the process of transformation of an urban space, which is deteriorated or in process of decline, through the rehabilitation or reconstruction of an important part of its buildings. This causes an increase in rents and housing costs. For this reason, people who live there tend to move to other more peripheral and cheaper areas. However, gentrification is not only about physical aspects, but it has much to do with social strata and popular displacement. This process implies that those neighborhoods and cities is occupied by people with higher income level. 

Gentrification is directly related to urban centers, but truth is that it also affects peripheral areas that are easily accessible, mainly with public transportation, or to areas that have architectural heritage value. So, as it is extended over several neighbourhouds, it is no longer a specific problem in certain central areas.

In addition, the phenomenon of gentrification has turned from being a local phenomenon to having global flows, and even the demand for real estate products has become much more international, which shows that it is a very relevant phenomenon in the current context.

The term "gentrification" was coined by the British sociologist Ruth Glass in 1964, referring to the alterations in the real estate market in specific areas of London, following the arrival of upper and middle class population in neighborhoods that had previously been occupied by workers.

However, this concept has been nuanced over time, mainly with the different realities found in different urban areas around the world. What many specialist do agree on is that this phenomenon and concept has a double impact: on the urban reality and on social aspects.

London, Madrid, Berlin or Rome are just some of the European cities that have suffered the most this process of gentrification. Their ideally located urban centers are used for tourist housing or they are  of interest to a higher social class. The most relevant characteristic of this process is the so-called "rent gap".

This mechanism allows to buy cheaper and, with a certain investment, sell at a higher price. Therefore, the local middle classes tend to become poorer and demand tends to be more international. The latter case occurs especially in certain local markets, cheaper in the international context, such as the market in Spain after the crisis, in relation to other European countries.

Tourism and gentrification

The trend towards internationalization in a context where the local market is cheaper, causes speculation in the real estate market, indirectly raising housing prices and especially rental prices. We see this in the irruption of tourist accommodation platforms, such as AirBnB. Due to this speculation, the local population is displaced and replaced by a "non-population" that threatens certain businesses, such as the local ones and provokes difficulties to many professionals who can not find housing near their work. 

To face this situation, it seems necessary to address the problem from the regularization. Thats's why some cities such as Amsterdam, Barcelona or London are already working to address this type of challenge. Without a doubt, this is something that will enable the establishment of minimum conditions for the welfare system. After all, it does not only affect in an economic way, but it has been demonstrated that there are direct consequences of gentrification on health.

Other solutions to solve the gentrification situations have to do with the need to increase the rental rate, making this market more attractive to the middle classes. By means of indefinite rent contracts or with limits in highly demanded areas, among other measures, a solution could be given to an increasingly extended problem. 

The gentrification and touristification of the housing are very relevant topics that every year are treated in the module Sociology, Economy and Politics of the Master of Advance Studies in Collective Housing, of the hand of the professors Daniel Sorando y Javier Gil.

Master in Collective Housing UPM/ETH