Urban renewal, gentrification, and inequality

I have blogged earlier about the increasing contribution of urban real estate prices to the widening if inequality in many countries. The rising property prices in most major cities across the world have made them a very attractive investment opportunity for the city's richest residents. In many cities, developers have re-developed blighted areas, creating expensive residential and commercial spaces, which have also had the effect of displacing the less well-off to the suburbs.

In this context, the Times has an article about the re-development taking place in a Parisian block. The project involves the redevelopment of a couple of streets, involving 36 store fronts, into a sleek epicurean village, La Jeune Rue (The Young Street), dedicated to farm-fresh gastronomy and a culture of the chic. It writes,

The trend of gentrification has become almost unstoppable. Paris, New York, London and other major metropolises have undergone waves of urban renewal for decades, each ushering in more wealth than the last, while also pricing out those with less money. While the essence of Paris has hardly disappeared, property prices have jumped an average of 165 percent in 20 years, with a 30 percent surge in the last five. The impact has been striking, cutting Paris’s working-class population to 27 percent from more than 40 percent over the same period. 

Much the same story has been a feature of Michael Bloomberg tenure at New York as he oversaw a massive redevelopment of blighted areas. While it has transformed the landscape of those areas and contributed to the overall economic growth of the City, it has had adverse demographic consequences. As the supply of lower rental housing units, concentrated in these areas, has shrunk, rents for properties at the bottom of the market have risen sharply and the less well-off have been marginalized into the suburbs.