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New spaces of capital: The Real Estate/Financial Complex in Russia and Poland

Book - Dissertation

English SummaryThe state-finance-real estate ‘triangle’ found its most spectacular expression in2007/8 when the collapse of the U.S. mortgage market caused an economic crisisof global scale. Yet, even though financial news is full of implicit references to theinteraction between the three dimensions, it rarely explicitly addresses it as issue inits own right. For this reason, Aalbers (2013b:1) has proposed the metaphor of the‘Real Estate/Financial Complex’ to centre attention on the linkages between thesethree realms. The present thesis is part of the Real Estate/Financial Complexresearch programme and studies the Russian and Polish cases. My centralobjective is to discern dynamics of real estate financialisation and to explaindifferences in this phenomenon as it unfolds in the two countries.The thesis finds that property markets in both Russia and Poland have becomeincreasingly entangled with the dynamics of financialisation. Yet, the extent of thisprocess and its form differs in the two countries. Russia has experienced very littleand discontinuous financialisation of its real estate markets in the past threedecades. Here, real estate-financial relations are defined by strong involvement ofdomestic capital and state actors and dynamics of global commodity markets.Poland’s real estate market in contrast has undergone more comprehensive andcontinuous financialisation since the inception of market relations. Specifically, realestate is inserted into dynamics of financialisation from a position of subordination,serving as investment outlet for globally mobile capital. In both countries statesocialist legacies enable the commercialisation and (partial) financialisation of realestate markets.To explain these differences the thesis foregrounds two dimensions: Russia andPoland’s respective political regimes and distinct modes of integration in thehierarchical global economy. In so doing the thesis does not only extend theliterature on the financialisation of real estate to post-socialist geographies, but alsocontributes to a more nuanced understanding of the process in general. It showshow international and domestic power relations are (re)produced and negotiatedthrough real estate financialisation and, in the process, shape the distinct nature ofthe latter.Moreover, this thesis draws on and contributes to a wider set of literatures. First, itbuilds on the core-periphery framework developed by World-systems Analysis andin particular studies that foreground the role of finance and financialisation inreproducing and deepening the hierarchies and divisions of the contemporary globaleconomy. Second, it engages with Jessops’ strategic relational approach to thestate and notions of state-space restructuring and assemblage to account for thecomplex constitution of the state and to analyse real estate-financial relations asone outlet and medium of its power. To better appreciate transformation and thehistory of state socialism in shaping dynamics of financialisation, I lastly engagewith critical literature on post-socialism. I suggest that rather than constrainingfinancialisation, socialist legacies can facilitate its advance and magnify its effects.VIIIThe study is based on a mix of mainly qualitative methods that are embedded in ahistorical approach to political economy. These methods include open-ended semistructuredinterviews and the collection and analysis of a wide range of primary andsecondary data sources. During five research stays between 2013 and 2016, Iconducted 77 interviews with professionals in the real estate industry, the financialsector, civil servants, urban planners, architects, journalists, and political and urbanactivists.In part I of this thesis, I set out the context of Russia and Poland’s political economicdevelopment to help the reader situate the general findings of the dissertation. Inparticular, I highlight how different elite constellations, external and internalpressures and endowments have put the two countries on different transformationpaths, resulting in distinct political regimes and modes of global economicintegration. In part II, I focus on national-level dynamics and examine the interactionof actors and tools of modern finance with the two countries’ respective commercialproperty markets and housing finance systems. Studying Russia and Poland’scommercial real estate markets, I highlight a common trajectory towards theincreasing economic importance of the property sector and its growingentanglement with modern finance, but also identify key differences in this process.In particular, I find that Russia’s commercial real estate market experiencedtemporary and partial financialisation, which was linked to domestic processes ofcapital switching. Commercial real estate in Poland, in contrast, experienced morethorough and continuous financialisation as spatial fix for globally mobile capital. Ithen explore the realm of housing by examining how mortgage markets in Russiaand Poland have become exposed to and integrated into global processes offinancialisation. I show that even though explicitly embracing securitisation—a keytool of finanicalisation—the Russian mortgage market remains dominated by stateactors and is isolated from dynamics of financial markets. The Russian mortgagemarket is therefore a case of financialisation in form—in terms of the institution ofsecuritisation—only. While the polish housing finance system was not designed toattract global investors and produce financial assets, it has experienced morecomprehensive financialisation. The Polish mortgage market is thereforefinancialised in form—through FX loans—and effect—in terms of risk transmissionand the transformation of households into investor subjects. I also examine howRussia and Poland’s states rely on dynamics of real estate internationalisation toreproduce and negotiate their outward-oriented power, in Russia via geopolitics andin Poland through economic integration. This foregrounds the state as assemblageof strategic relations, and as more than a regulatory force. In part III, I shed light onthe urban dimension of Russia and Poland’s real estate-financial relations. Towardsthis, I first trace the evolution of Warsaw and Moscow’s urban political economiessince the late 1980s, and then offer case studies of business districts in the twocities. Part IV concludes with a summary of the thesis’ findings and considerationsof future avenues for research.
Publication year:2017