Urban entrepreneurialism and creative destruction: a case-study of the urban renewal strategy in the peri-centre of Santiago de Chile, 1990-2005

Since the early 1990s, urban renewal in the peri-centre (inner city) of Santiago de Chile – a metropolis where urban development is part of a strategic national economic agenda – has produced high-density blocks and large-scale redevelopments in decayed neighbourhoods. However, as the rent gap theory suggests, urban decay may be not a ‘natural’ process but a form of market regulation that seeks to devalue both the building value (BV) and the capitalised ground rent (CGR), increase the potential ground rent (PGR), and therefore produce a rent gap large enough to attract large-scale redevelopers to these areas. Based on a case study of the south-western peri-centre of Santiago from 1990 to 2005, this thesis documents: first, significant variations in the CGR in the peri-centre and diverse forms of accumulation of the rent gap by large scale developers. Second, the roles played by the state in subsidising this market and regulating the rent gap through local master plans and national building guidelines. Third, the uneven application of housing upgrading programmes by many peri-central municipalities that limit alternatives to mid-density urban renewal, and the effects produced by the devaluation of the CGR in the use and exchange land values of peri-central neighbourhoods. Fourth, the capacity shown by organised neighbourhood communities to create alternative forms of control of PGR increases. The thesis concludes that, although the rent gap theory provides an effective tool to examine the political and economic conditions leading to gentrification, it needs to be contextualised for Latin America. Control of the rent gap and of its uneven impacts in terms of spatial distribution and accumulation, greater social participation in the definition of urban and building regulations, and more accountable management of the housing upgrading programmes are policy issues that need to be addressed by the Chilean public sector if the current model of urban renewal is to help to improve social reproduction in the peri-centre of Chile’s capital city