Table Of Content“This comparative analysis of the evolution of housing markets across
Latin American nations fills a much needed gap in the global literature
on financialization. Alfonso Valenzuela Aguilera examines a series of case
studies, which highlight differing policies and outcomes, and demonstrates
the social implications of the variegated financialization of land, real
estate, and housing policy across the region. This is a huge contribution
to the scholarship and necessary reading for those seeking solutions to the
growing problems caused by asset- based policies.”
— Alan Walks, Professor of Urban Geography and
Planning, University of Toronto.
The Financialization of Latin American
Real Estate Markets: New Frontiers
The Financialization of Latin American Real Estate Markets: New Frontiers
introduces the fundamental principles of urban economics, housing, and
large- scale real estate development in Latin America and equips aspiring
investors and developers with the foundations for success in a unique,
dynamic region. Using case studies from the Americas, this textbook
provides a framework for assessing the economic, technological, social,
and political forces that shape urban space, helping readers understand
the aims and risks of real estate investment. Chapters on economic theory,
novel financial instruments, and the regulatory environment connect real-
world practice to the latest scholarly conversations in urban planning,
real estate finance and development, and regional studies.
Informed by the author’s extensive experience as an academic and
practitioner throughout the region, this distinctive resource sheds light
on the relationship between financial capital and urban form, and places
Latin American cities at the center of the urban economy debate.
Features:
• Provides a thorough introduction to the mechanics of real estate
markets, grounding spatial and economic theories with practical
examples of the tools used to finance urban development in Latin
America
• Centers around case studies from Mexico, Brazil, Chile, Panama,
Argentina, and Colombia – some of the region’s most dynamic
markets
• Presents financial instruments such as mortgage- backed securities,
collateralized debt obligations, credit default swaps, and real estate
investment trusts in a global context
• Examines State policies and programs for housing and infrastructure in
Latin America, demonstrating regional patterns and new perspectives
• Covers real estate finance from housing to megaprojects, exploring
recent trends in infrastructure, commercial centers, and tourism with
an eye toward sustainable financing practices for the future
Suitable for graduate and upper- level undergraduate students of real
estate, urban planning, and Latin American studies, The Financialization
of Latin American Real Estate Markets: New Frontiers also serves as essen-
tial reading for professionals in international real estate finance and
development.
Alfonso Valenzuela Aguilera is Professor of Urban Planning at the State
University of Morelos, and the John Bousfield Distinguished Visitor in
Planning at the University of Toronto. He also works as a planning ana-
lyst/ consultant and advises various citizen boards and councils.
The Financialization of Latin
American Real Estate Markets
New Frontiers
Alfonso Valenzuela Aguilera
Cover image: © Getty Images/Carlos Silva
First published 2023
by Routledge
605 Third Avenue, New York, NY 10158
and by Routledge
4 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2023 Alfonso Valenzuela Aguilera
The right of Alfonso Valenzuela Aguilera to be identified as author of this work
has been asserted in accordance with sections 77 and 78 of the Copyright,
Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or utilised
in any form or by any electronic, mechanical, or other means, now known or
hereafter invented, including photocopying and recording, or in any information
storage or retrieval system, without permission in writing from the publishers.
Trademark notice: Product or corporate names may be trademarks or registered
trademarks, and are used only for identification and explanation without
intent to infringe.
Library of Congress Cataloging- in- Publication Data
Names: Valenzuela Aguilera, Alfonso, author.
Title: The financialization of Latin American real estate markets:
new frontiers / Alfonso Valenzuela Aguilera.
Description: New York, NY: Routledge, 2022. |
Includes bibliographical references and index.
Identifiers: LCCN 2021061012 (print) | LCCN 2021061013 (ebook) |
ISBN 9780367634872 (paperback) | ISBN 9780367634896 (hardback) |
ISBN 9781003119340 (ebook)
Subjects: LCSH: Real estate investment– Latin America. |
Real property– Latin America. | Financialization– Latin America.
Classification: LCC HD320.5 . V35 2022 (print) |
LCC HD320.5 (ebook) | DDC 332.63/ 24098– dc23/ eng/ 20220107
LC record available at https:// lccn.loc.gov/ 2021061012
LC ebook record available at https:// lccn.loc.gov/ 2021061013
ISBN: 978- 0- 367- 63489- 6 (hbk)
ISBN: 978- 0- 367- 63487- 2 (pbk)
ISBN: 978- 1- 003- 11934- 0 (ebk)
DOI: 10.1201/ 9781003119340
Typeset in Goudy
by Newgen Publishing UK
Contents
Preface ix
Acknowledgments x
Introduction 1
1 Financial capital and the restructuring of cities 5
The urban economy and the city structure 5
Framing the development of geographical economics 7
Revisiting urban spatial economics 12
The economics of spatial location and the definition of land prices 27
Conclusion: the economic nature of cities 31
2 Theorizing the spatial structure of cities 35
Fictitious capital and real estate markets 35
Revisiting urban land rent theories 39
The formation of urban land prices 42
The three circuits of the spatial economy 49
Social and institutional frameworks 55
Real estate markets in Latin America 58
3 Financial instruments as tools 63
Financial instruments and the location of capital 63
Mortgage- backed securities (MBSs) 67
The impact of collateralized debt obligations (CDOs) 72
Credit default swaps (CDSs) 78
Real estate investment trusts (REITs) 83
4 Financing housing markets 91
Housing: financial markets and the State 91
Chile and progressive housing programs 96
Mexico and private housing corporations 102
viii Contents
Brazil and Minha Casa, Minha Vida program 113
Colombia and the production of social housing schemes 119
New perspectives on housing policies in Latin America 125
5 Financing megaprojects in Latin America 130
Megaprojects: finance, markets, and the State 130
Puerto Madero, Buenos Aires 132
Santa Fe, Mexico City 138
Punta Pacífica, Panama City 144
Porto Maravilha, Rio de Janeiro 151
6 Financial instruments and the city 159
International flows of capital and urban governance 159
Financial instruments for infrastructure 163
Financial instruments for shopping centers 176
Financial instruments for tourism 180
7 Conclusions: sustainable financing practices
of cities 186
The financialization of living environments 187
Megaprojects: large investments and the State 191
The instrumentalization of capital in the urban realm 194
References 199
Index 216
Preface
Financial capital is shaping cities and restructuring their territories,
increasing its dominance among financial actors, markets, and decision-
makers. This book provides readers with a basic understanding of the
principles that underlie real estate development, urban economic theo-
ries, and the particular modes of finance that are being used to reshape
Latin American cities, emphasizing the role of land rent theory in the
tradition of Marxist analysis as a theoretical foundation, adding to the
debate on urban economics and introducing the main concepts pertaining
to financial real estate markets.
This cutting-e dge volume paves the way for future research, attending
to the issue of market dynamics and financial bubbles, which have been
cyclical in Latin America both before and in the aftermath of the US
house- price collapse that precipitated the global crisis of 2008. This
volume introduces readers to the mechanics of real estate markets covering
a combination of theories, instruments, and practical examples. Focusing
on Latin America, the book reflects the way in which cities follow similar
patterns in the design of housing policy and programs, the mechanisms for
producing infrastructure in those cities, and the growing disparities that
high levels of investment are producing among their citizens.
