Financialising urban redevelopment

Abstract

Chinese cities have experienced rapid urbanisation and attracted massive investment in the central city through urban redevelopment. Developing less favourable urban areas such as former industrial sites along the waterfront is less attractive for investment as these areas usually need to deal with poor environments and complicated land ownership. It is therefore important to understand how these urban projects are carried out and what financial instruments are used. This paper examines four waterfront redevelopment projects in Shanghai in the last three decades and asks how they got financed. The financial mechanism in the examined cases confirmed that land-based capital accumulation is central in the financialisation of these projects, with the important role of the state-owned development companies in each project to mobilise capital and carry out development. The paper also finds that the variety of innovative financial instruments like bonds, public-private partnership or the urban regeneration fund are explored to tap capital from domestic and international investors. These financial instruments are complementary to the land-based finance which facilitates urban redevelopment in less attractive waterfront areas, allowing new financial players to explore the potential for the waterfront.