A multidimensional approach to urban entrepreneurialism, financialization, and gentrification in the highrise residential market of inner Santiago, Chile

Abstract

In 1975, private and social housing production in Chile started to become increasingly privatized, in parallel with capital switching into the secondary circuit due to severe deindustrialization of the country. Since then, housing demand has largely drawn on state housing subsidies aimed at middle- to low-income demand, but more recently, a growing financialized mortgage market has increased demand even further, enlarging the mortgage debt burden on Chilean households. Private housing producers achieve higher profits by increasing sales prices, whilst production costs are kept relatively stable by purchasing and developing the cheapest land available, both on the fringes and within the inner sectors of the main metropolitan areas, as a form of accumulation by dispossession in hitherto underexploited, non-commodified land. However, low purchase prices of land create housing unaffordability for numbers of original owner-residents who sell land to redevelopers but cannot then afford replacement accommodation given the soaring housing prices in the main metropolises. It is for this reason that some central areas become gentrified. Focusing on the case of high-rise redevelopment of inner-city areas in Santiago, Chile, this paper addresses the extent to which demand and private developers' profits increase alongside the risks of a generalized growing level of household debt and the displacement of low-income communities from inner areas. The continuous expansion of the extremely privatized housing market of Santiago responds to the needs of capital expansion rather than to the people's needs.