The Price of Regeneration

Every year the University of East London’s Master of Research course in architecture, titled “Reading the Neoliberal City,” begins with a walk around the wider local area — and every year what we experience is substantially different.

From Cyprus we take the Docklands Light Railway into the heart of the original Docklands developments, to start to investigate the origins of its heavily contested story. We walk through the private estates at South Quay and pass what feel like endless hoardings for the new luxury developments which line the route to Canary Wharf, the privately owned, high security estate which in the 1980s pioneered “regeneration” — a “tabula rasa” model of development which saw former low-value industrial land repurposed as private space for investment, which would command high property prices and rents. Passing by the barriers, bollards, and uniformed guards who police the 97-acre estate, we cross the footbridge to West India Quay where an exhibition at the Museum of London is all that remains of the history of the old docks and the community campaign for an alternative plan. A hundred meters on, we hit a hard boundary where the estate comes to an abrupt end at Aspen Way, the dual carriageway separating Canary Wharf from the Poplar district on the other side.

When I first took students on this walk five years ago, the footbridge over the carriageway was a stark transition point between the two different worlds of the gleaming finance center of the redeveloped wharf and Poplar’s shabby housing estates. The skyscrapers still loom over the old estates but now it’s Poplar that is the contested area, with bitter battles raging over the future of Chrisp Street Market, Balfron Tower, and Robin Hood Gardens. Poplar Harca, the housing association set up by Tower Hamlets Borough Council to manage its 9,000 homes, is at the center of the area’s regeneration plans, proposing to replace the market with new shops, a cinema, and 650 mostly luxury apartments. Following a public outcry, closely linked to decisions made on nearby Balfron Tower and Robin Hood Gardens, planning permission was postponed.

Grade II-listed Balfron Tower, built by Erno Goldfinger in 1967, has been at the center of another gentrification battle after Poplar Harca began refurbishment of the block with a view to converting all the properties into luxury apartments for private sale — despite earlier promises that the social-housing residents who wished to would be able to return. Balfron Tower is a protected building so it escapes the fate of so many council estates across London which now face demolition, to be replaced by yet more luxury developments with limited affordable housing. We always end our walk at neighboring Robin Hood Gardens, just a few minutes away. While the scenes we confront change every year, this place is now the most traumatically different; at the time of writing, bulldozers are onsite and through a gouged-out section of Robin Hood Gardens you can see the HSBC tower — a fitting symbol of the impact of international capital on rundown housing estates. An accompanying symbol of global property finance has been doing the rounds on social media in the form of an advertisement for a launch event for the new Blackwall Reach development, which will replace Robin Hood Gardens. Held at the Mandarin Oriental Hotel in Hong Kong in October 2017, when the bulldozers had barely got onto the site, the event boasted “East London’s Best Value 2 Bedroom Apartments from £565,000.”

The Victoria and Albert Museum has acquired a section of Robin Hood Gardens, thus making cultural capital from an iconic building which was not deemed worth saving as social housing.

Designed by Peter and Alison Smithson and completed in 1972, Robin Hood Gardens was, like Balfron Tower, considered by many to be a modernist masterpiece. On previous walks we have encountered visiting architects from all over the world. A campaign to gain listed status was supported by preservation organizations, architectural historians, and leading practitioners including Richard Rogers and Zaha Hadid, who said it was her favorite building in London. The campaign failed and was followed by a second application by the Twentieth Century Society, which also failed. The ironic addendum to this story is that the Victoria and Albert Museum recently acquired a three-story section of the estate, including the exterior facades and the interiors of a maisonette flat. The nine-meter-high section is likely to be exhibited in the new entrance to the V&A East at Olympic Park; the museum contends that the acquisition will not only preserve a part of the building but also maintain conversations about social housing. But critics have rounded on the museum, pointing out that the V&A — which did not back the preservation campaign — should have intervened earlier when it could have wielded considerable influence on lawmakers. Instead a public institution is viewed as making cultural capital from an iconic building which was not deemed worth saving as housing for people to live in.

Placemaking and the “Rent Gap”

The conversion of Balfron Tower into luxury apartments and the replacement of Robin Hood Gardens by Blackwall Reach, alongside a regenerated Chrisp Street Market quite unlike the current version, are all examples of “placemaking” strategies. Similar strategies are in play across neighboring Newham’s “Arc of Opportunity” area, at the Greenwich Peninsula, at Kings Cross, in Elephant and Castle, and throughout London and other British — and North American — cities. The strategy, (in)famously popularized in Richard Florida’s landmark book, The Rise of the Creative Class, holds that knowledge workers — in design, technology, education, arts, entertainment — are the spur for urban growth through innovation, and that placemaking should aim to attract these types who power forward the new economy and cleave to hip locations. The widely favored model is what some urban theorists call “innovation clusters” ¹ — ideally featuring a university, commercial space, shops, restaurants, and perhaps an art gallery, all alongside luxury apartments — most often in a Canary Wharf-style, privately owned, high security environment.

The Heygate Estate was demolished in the face of huge local opposition and replaced by the luxury complex Elephant Park.

Stratford Waterfront and Here East, both in the Olympic Park, are flagship examples of such clusters, with global museums and cultural institutions, a tech hub, University of the Arts London’s College of Fashion, and University College London’s Engineering School and Bartlett School of Architecture. At Greenwich Peninsula, the presence of the art school Ravensbourne brings activity and a “sense of place” to the area, which also boasts The O2 entertainment venue and Emirates Air Line among the attractions for those seeking to invest in the forest of luxury apartment towers now being constructed. At Kings Cross, another art school, Central Saint Martin’s, provides the cultural capital for what is billed as the largest redevelopment in northern Europe, set in a private estate of 2,000 homes alongside yet another innovation cluster which includes Google’s U.K. headquarters, with Facebook apparently set to follow. And in Elephant and Castle, where the Heygate Estate was demolished in the face of huge local opposition and replaced by the luxury complex Elephant Park, the London College of Communication has partnered with developer Delancey to redevelop the shopping center in a scheme that uncannily mirrors what is happening in Poplar.

“Placemaking” is a vague term, which seems to have originated in the U.S., at the behest of the American policy makers who have been so influential in shaping U.K. policy towards cities. Bruce Katz — a specialist in “global urbanization” at the Brookings Institution, where he founded the Metropolitan Policy Program two decades ago — has been a leading player in the development of these strategies, which closely cross-fertilized with New Labour during the late 1990s and 2000s; it’s a terms he favors in his book The New Localism: How Cities Can Thrive in the Age of Populism. For Katz, placemaking is “largely an organic process” whereby former industrial and inner-city areas are regenerated by “extracting value” through “increasing commercial yield” — which is to say that real estate developers will be attracted by the potential of relatively low-priced urban areas to generate far higher returns on investment. As often as not existing communities are displaced as the cost of housing soars. The New Localism acknowledges that the typical outcome is “tenant replacement” as “yesterday’s artist’s lofts become tomorrow’s investment banker’s condos” ²; but while housing affordability is seen as an issue it is not addressed —almost as though it were collateral damage, the price that must be paid.

‘Placemaking’ is often used as a rationale for contested redevelopment projects that cause the removal of existing communities.

An alternative lens through which to view such processes is provided by the late geographer Neil Smith, who in 1979 developed his theory of the “rent gap” as an economic explanation for gentrification. ³ This held that when the gap between the current “rent” or income from a property and the potential income was large enough, developers would become interested and private capital would follow. Smith’s insights provide an explanation for British urban policy in Docklands during the 1980s and beyond as incentives and tax breaks were provided to real estate developers to invest in run-down industrial areas; in those years self-styled urbanists such as Katz were putting forward the value of placemaking as a rationale and justification for these often controversial approaches. In the late ’90s and 2000s, New Labour governments were increasingly driven by the desire to “extract value” from urban places, which led to the scandal of “Pathfinders” — the “Housing Market Renewal Program” that aimed to increase property prices in well-located areas of low value in Northern towns. But while areas where prices had collapsed were the initial focus, the program rapidly expanded far beyond this mandate and resulted in the demolition of tens of thousands of properties and the destruction of communities in towns across the North of England. ⁴

More recently, the determined attempt by London councils to partner with developers to raze their housing estates has seen the revival of this approach, which was spearheaded by the former Labour Cabinet Minister Andrew Adonis, after former Chancellor George Osborne appointed him chair of the National Infrastructure Commission. ⁵ In 2015 Adonis explained his version of the “rent gap” to the Financial Times:

The scale of council-owned land is vast and greatly under appreciated. There are particularly large concentrations of council-owned land in inner London and this is some of the highest priced land in the world. … [The] local authority planning regime has got to adapt properly to the potential for [market-priced rent] developments. ⁶

When Neil Smith first highlighted the rent gap, the speed of global capital flows bore no relation to what we see today; back then the impact of capital on potentially high-value areas happened over considerably longer periods. This has been particularly the case in London, which since the financial crisis of 2008 has witnessed a flood of capital as a result of various factors. These include quantitative easing — the policy of bailing out banks through the creation of new money which was then directed into the property market — and London’s minimal tax and regulatory regime. ⁷ One crucial consequence of lax regulation — highlighted in the revelations of the Panama Papers and Paradise Papers — has been the influx of foreign investment into tens of thousands of anonymous and often offshore shell companies, many of which are known to hide corrupt sources. ⁸ These factors have combined with council policies to bring about the demolition of housing estates and their replacement with luxury developments like Blackwall Reach or Elephant Park, which target private investors. Councils argue this is the only way to cross-subsidize affordable housing, given a climate of austerity in which local authorities are facing savage budget cuts; but some critics describe the process as “state-led gentrification.” ⁹  Robin Hood Gardens is just one example of the collateral damage; academics estimate that estate demolition has so far claimed at least 100,000 housing units around London. ¹⁰

Collateral Damage and Structural Instability

The irony is that the sheer volume of “placemaking,” amply illustrated by all the cranes and construction sites around London, is not providing the housing the city needs. The Blackwall Reach sales brochure distributed at that event in the Mandarin Oriental Hotel in Hong Kong includes an instructive section for investors headed “Reasons to buy in London.” An image of a padlock highlights the importance of London as a “safe haven,” which is shorthand for the city’s relaxed tax and regulatory burden; but the brochure’s main point is the undersupply of new homes, with the graphic explaining that 52,000 homes are required per annum but only 24,800 were built in 2016. So foreign investors are encouraged to buy on the very basis that local people are excluded from the property market. The clear implication is that the private rental market in London will provide steady returns for Asian investors.

Most people cannot afford to live in London’s new “affordable” homes, as the government definition of “affordable housing” has been changed to mean up to 80 percent of market rent or market value and starter homes for up to £450,000. ¹¹ Estate regeneration policies may have produced more homes overall, 25 to 30 percent of which are putatively affordable; but the actual result is that all this new housing is too expensive even for relatively high income homebuyers. Meanwhile social housing, which is genuinely affordable, is slashed. ¹²

In Elephant and Castle, the Heygate Estate originally housed more than 3,000 people in 1,214 homes. But of the 2,704 new homes at Elephant Park — the project by the Australian developer Lendlease, which replaced the estate — only 82 are for social rent. At the start of 2018, a two-bedroom property at Elephant Park ranged in price from £890,000 to over £1 million. These properties are squarely out of reach not only for low-income but also for middle- and even high-income households; and in any case, in the first phase, 100 percent of the properties were sold to foreign investors. At the same time, the initial promises by Southwark Council to rehouse 500 Heygate households on the redeveloped site were not honored — another instance of the collateral damage of placemaking.

Former council estate residents have been forced to leave London; serious mental health problems are common among those displaced from longtime communities.

While most tenants were rehoused within the borough — albeit at some distance from social networks, schools, communities — it is the homeowners on these estates, the leaseholders who bought their homes under the Right to Buy law introduced in the Thatcher years, who have been particularly hard hit. Indeed many have been forced to move out of London, a consequence of the inadequate compensation — about £107,230 for a two-bedroom flat — these owners received when required to sell their homes due to Compulsory Purchase policies. Former Heygate Estate residents now live in Orpington, Sevenoaks, Thurrock, and Rochester. A retired couple I interviewed who had to leave London for Sidcup have suffered mental health problems including depression, which is common among those who have been displaced. ¹³ And Blackwall Reach, which is replacing the Robin Hood Gardens, is similarly beyond reach for most Londoners; here the starting price for a two-bedroom flat is about £650,000.

Elephant Park, Blackwall Reach, and other London projects are often marketed to foreign investors in a scheme known as “off plan” — which means before they are even built. Not only does this fail to meet local need, it is also building structural instability into the property market. The launch event for Blackwall Reach in Hong Kong advertised “preferential payment terms,” including “5% on exchange, 5% after 12 months, balance on completion.” This means that investors could pay little more than £30,000 to purchase an apartment, followed by a similar payment a year later if they are still interested, with 90 percent of the price not due until later still. So while a developer may claim that they have sold all the properties in a project, the reality may well be that they have only sold five percent; and if it looks as if prices may fall, investors will likely pull out. This is already happening across London, with 15,000 unsold apartments creating headlines about “posh ghost towers.” The property consultant Molior London estimates that it will take at least three years to sell the glut of luxury flats if sales continue at their current rate and no new apartments are built. Meanwhile developers have an astonishing 420 residential towers in the pipeline. ¹⁴

After Grenfell

On June 14, 2017, the Grenfell Tower fire killed 71 people in an inferno that firefighters said they would not expect to see in a developing city, let alone in one of the richest parts of one of the richest cities in the world. Shortly afterward it emerged that an organization of local activists, the Grenfell Action Group, had earlier warned in a horrifyingly prescient blog post entitled “Playing with Fire” that it would take a “catastrophic event” to expose the scandal of housing mismanagement in Kensington and Chelsea. ¹⁵ What links the tragedy at Grenfell with the contested development struggles taking place across London and other cities is the lack of accountability that housing councils and the assorted redevelopment quangos and companies display towards communities that stand in their way.

Yet the Grenfell tragedy has, as the activists predicted, shone a glaring light on the manifold failures of contemporary regeneration and placemaking strategies, sparking a search for alternative approaches. What many housing campaigners are finding hardest to bear is that it is Labour councils who have been pursuing regeneration most avidly, from Newham and Tower Hamlets in East London to Southwark and Lambeth in the South. Speaking in the shadow of the disaster, Labour leader Jeremy Corbyn told his party conference that “after Grenfell we must think again about what are called regeneration schemes. Too often what it really means is forced gentrification and social cleansing, as private developers move in and tenants and leaseholders are moved out.” ¹⁶ This was followed in 2018 by London Mayor Sadiq Khan pledging that estate regeneration would not go ahead without balloted agreement by a majority of residents.

The most unexpected intervention in a flagship placemaking scheme took place in Haringey in North West London, when Labour’s governing body, the National Executive Committee, voted to ask Haringey Council to halt its controversial plan to enter into a public-private partnership with the developer Lendlease. Under this plan, called the “Haringey Development Vehicle,” large tracts of public land would be transferred into a fifty–fifty joint venture between the council and developer. The two-decade project aimed to build 6,400 homes and a new town center in Wood Green; it was bitterly opposed by residents who feared that local estates would be demolished and that new homes would not be affordable.

A rethinking of some of the more violent aspects of placemaking policy — the ‘collateral damage’ of displacement — is now underway.

It is always difficult to predict which directions urban policy will follow, given the uncertainties of the wider political and economic contexts. But the signs are promising that a rethink of some of the more violent aspects of placemaking policy — the collateral damage — is underway. It just might be time to revisit the Museum of London and dust off the alternative “People’s Plan” for East London and glean what we may learn from it; for today many “People’s Plans” are once again being prepared across London, from the People’s Empowerment Alliance for Custom House, or PEACH, which falls within Newham’s “Arc of Opportunity,” to Haringey, where citizens jubilant at the failure of the Haringey Development Vehicle are keen to present alternatives. The blossoming of these plans is a result of increasingly powerful coalitions of local residents and multidisciplinary pro bono activists who are pursuing a democratic tradition that may yet be renewed in the coming years.