Published January 10, 2017

Rethinking domestic and urban spaces for a better future: lessons from the Spanish property bubble

Spain is a country profoundly impacted by an ongoing property crisis, strongly linked to the disruption caused by the technology and data revolution. As a result, it is argued that the urban landscape is in radical need of change if lives are to be transformed for the better.
Writer
CEO, Mediaurban
Maria Sisternas is co-founder and CEO of Mediaurban, the Urban Content Creation Agency of the Mediapro Group. She is a City Design Consultant and Entrepreneur, specialising on the links between the digital, social, economic and legal issues that contribute to the development of Contemporary Cities. Having served as Projects Director at the Barcelona City Council at the Urban Habitat Department (a Macro Area in charge of Housing, Planning, Infrastructures, Utilities, Energy and IT), she led the urban transformation of the city under Mayor Xavier Trias mandate. She now leads a multidisciplinary team whose aim is to change the world, by improving real cities.

Technically, I’m one of the oldest Millennials: an architect by trade and entrepreneur by profession, at 35 I consider myself to be something of a “lucky” Millennial, committed to the problems that affect cities.

I am passionate about cities and their contradictions, I don’t believe that urban collapse is inevitable, and I feel that social progress goes hand in hand with transformation. Ideas aren’t enough without the projects to back them up, and only ambitious, or even risky projects can break thoroughly ingrained conditions like inequality, social injustice, unemployment and exclusion. The city puts us all on an even playing field: we are urban beings, and science applied to the anatomy of the city, about which we know very little, by the way, should help a world that is increasingly more urban to progress.

The property crisis in Spain, linked to an unprecedented digital revolution, has radically transformed the construction sector, in turn influencing the way cities are traditionally developed. The burst housing bubble, coupled with the tech and data revolution, has changed the way we live, giving us the potential to correct shortcomings and build a stronger, more people-oriented urban economy. Because knowledge holds the solution to this crisis and there are no longer problems that can’t be solved, there is a conviction that the housing crisis can open up positive paths for Spanish cities.

In Spain, the middle class has seen its purchasing power slip away as the disparity in the income earned from work grows. That said, I will argue here that the ‘city’, if it takes into account the mistakes of the past, can mitigate the impact of this new phenomenon and even generate fairer redistributive policies and opportunities that make climbing the social ladder easier.

Cities too slow with legislation in a tech disrupting age

On the one hand, carrying a window to the world in our pockets in the form of a smartphone or tablet has changed our lives: we share flats, buy and sell second-hand items and video conference at the click of a finger without knowing the first thing about programming. What began by revolutionising the business world is already beginning to have an impact on the city. Millennials no longer buy CDs, for example, because the money spent on the average cost of a CD can go towards a monthly subscription that provides access to a whole digital library that grows daily and makes it faster and easier to search for any song, by any artist, anywhere in the world. That is: access to services is quickly gaining ground on ownership. This paradigm shift can also be seen in shared-economy platforms like Uber and Airbnb, which gain millions of new users weekly,  and cities have not been quick enough to adapt their legislation accordingly.

Is a smartphone a phone, a camera, a data receiver, a GPS, a bus pass, a library card, a virtual classroom, a Big Data generator, a payment card…or everything all at once? Technology and data make it possible to break down any complex problem. And when broken down, worked out, and analysed in the light of objective data, absolutely all complex problems have a solution.

There is both optimism and the belief that the best part of technology will help to turn around traditionally unresolvable trends, if the technology is designed to serve people and not the other way around. Social dynamics in the 21st century are geared towards new forms of production and consumption. These social dynamics – when paired with the social consciousness acquired by generations that are extremely aware of the limits of the current development model and a competent public leadership – have the potential to mitigate the externalities of a globalised economy.

The younger generations, for example, are more aware of the world around them, despite the economic crisis and the fact that consumption continues to increase. Consumers now want to know who are behind the brands of the products they purchase, and for younger consumers sustainability has always been the name of the game: words like “rubbish” are meaningless for them, and they easily and naturally separate waste into five different categories without a second thought. While ‘life cycle’, ‘sustainability’ and ‘ecological footprint’ are largely foreign concepts to our parents’ generation, they are thoroughly embraced by those who grew up after the United Nations’ publication of Our Common Future in 1987. The hugely influential document (also known as the Brundtlant Report), was the first paper, for example, to coin the term ‘sustainable development’.

The shock of the new shared economy

The sharing economy extends further than just Uber and Airbnb to impact other sectors and, in the coming years, services like local healthcare and domestic services will be contracted via collaborative platforms. “À la carte” public transport services and large-scale urban operators will reinvent themselves by offering new solutions to the city’s old community, safety and energy problems.

Making cities into production hubs once again, printing tailor-made objects, co-creating in collaborative environments and empowering citizens to regain technological sovereignty will open the door to a new revolution in the local economy.

Digital manufacturing has already made its way into schools, and one of the most popular Christmas gifts in 2015 was a 3D printing pen. Under the aegis of its Department of Urban Habitat, in 2013, the city of Barcelona implemented a Public Network of Athenaums of Fabrication, a type of cultural centre which serves to supplement official training and bring together technology with students passionate about the maker’s movement. Making cities into production hubs once again, printing tailor-made objects, co-creating in collaborative environments and empowering citizens to regain technological sovereignty will open the door to a new revolution in the local economy.

If public policies on housing have not worked in Spain it is because the situation has not been properly diagnosed. The problems in cities are multi-faceted and tangent to various disciplines; political parties often oversimplify problems and end up proposing weak or even counterproductive solutions. The housing issue, however – intrinsic to building the city – deserves a more ambitious and more realistic approach to social changes. To understand each other, we must remove the problem from its architectural conception, and propose solutions that are more closely aligned with the paradigm shift.

People often talk about the loneliness faced by management: urban leaders are brave, sometimes extremely qualified, but very lonely. They often have the press and angry neighbours against them, they must fight against friendly fire, all while keeping their ambition, their legitimate ambition to build a better city, intact. Public administration and municipal teams, in particular, should not limit themselves to mere management. Transforming the city involves amplifying values and bringing creativity to bear; it means generating viable hopes and dreams and, above all, applying knowledge to solve difficult dynamics.

Bricks vs income vs Millennials

One of Spain’s structural problems is that the income from property has noticeably exceeded the income from work across recent years. This phenomenon has also been aggravated by a State with a short-term version which, fearing instability in the pension system, has pushed millions of citizens to deposit their savings in “bricks and mortar”, discouraging potential investment in the business and financial worlds.

But change is in the air, and although the cause is serious (and Spain is just making its way out of a long crisis with an excessive impact on the working and middle classes), it is an opportunity to rethink the housing production and access model. CBRE Spain recently surveyed 13,000 young people (22-29 years old) from 12 countries in a study that reveals astonishing data about the hopes that the younger generations have regarding housing.

Around 24% of the Spanish population, roughly 11 million people under the age of 35, are Millennials. Most of them, approximately 60%, still live with their parents, and 68% plan to rent; but only 16% intend to buy property in the future. This make sense if we take into account that the average income of Spaniards under the age of 29 is, on average, €1000 per month; nor does this age group have the savings required to make a down payment on a home.

For a generation that sleeps with their phones, that earns low wages and has few economic resources, purchasing a home is not only beyond their reach, but risky as well.

The truth is, it’s not for lack of desire: it’s that this generation simply can’t afford to buy a house. Some 80% of Millennials believe that incomes in no way corresponds to exploding housing costs, and there is some considerable truth to this: even before the crisis hit it was obvious that the housing market was limited, with poorly executed and poorly built options. For a generation that sleeps with their phones (83% say they do), that earns low wages and has few economic resources, purchasing a home is not only beyond their reach, but risky as well: homes can lose value and rent is no longer a form of compromise.

Back, and then to the future

The crisis and the housing bubble have turned the clock back on people who rent, instead of buy, to the same level as 30 years ago. In the last ten years, the number of long-term unemployed and those who have never held a job has doubled. All this is obviously reflected in the city, where these problems cease to be mere statistics and become harsh realities.

After the housing bubble burst, the percentage of the population living with deferred payments increased, and metropolitan areas in Spanish cities have suffered a drastic decrease in housing construction: the metropolitan area of Barcelona, for example, has gone from the annual construction of 15,000 or 18,000 units a year before the crisis to just over 2,000 units constructed in 2012.

The fact that the younger generation is unable to generate greater purchasing power or manage to save is both dramatic and unsustainable, but by not being fixated on a need to purchase a home this can help to curb property speculation. It is a generation educated in a solid public university system, able to articulate an intelligent demand on fairer residential products.

Before the housing crisis, Millennials bought flats that were not worth the price of their mortgage. This constitutes a barrier to their own personal development that they still carry today: Millennials have had to postpone having children, give up job mobility to keep from selling devalued flats, and have largely lost the ability to invest in emerging businesses or in their own entrepreneurial ventures.

The hope is that, if speculation is reduced, the property development sector will focus its businesses on creating affordable rental properties, reducing the profit margin but ensuring a growing universe of renters. The demand is there and shows every sign of continuing to grow.

Radical rethinking of domestic spaces

In her “Kitchenless City” project, which received Harvard University’s prestigious Wheelwright Prize, Anna Puigjaner analysed a historical and collective form of living. This living can, once again, be leveraged to provide value and respond to the real needs of this generation, which should be noted by property developers who want to keep up with the times.

Cities should offer buildings that take community values into account, with shared spaces that serve to make life more comfortable and more affordable for users.

The formula is simple: instead of selling four walls and a floor and flats of debatable quality, cities should offer buildings that take community values into account, with shared spaces that serve to make life more comfortable and more affordable for users. Individuals, couples, families or groups can live in low-cost private flats, without luxuries, and share spaces or services for economies of scale that allow them to save on costs. Puigjaner proposes the provocative formula of a set of homes with no real kitchen, where meals are prepared and eaten in communal dining halls. While it might seem like an idea imported from the most radical of Russia’s komunalkas, the communal kitchen cuts across all ideologies and social classes as an attractive product for households that have a high level of purchasing power, little time to cook and are willing to pay a monthly fee to have others cook for them as a professional service.

The business model is very clear: for a small fee, with prices adjusted to construction costs, property developers can sell flats at affordable prices and sustainably increase the return on their investment over time with energy services, community service fees, catering, laundry, home care and building maintenance. Of course, the volume of business over the years is the same, or possibly even higher, but it averts another housing bubble and a highly speculative promotion model from happening.

There is a housing emergency in Barcelona. All political parties agree: in fact, the city’s available subsidised housing for rent sits at around 1%, despite the Catalan Right to Housing Act, which provided for 120,000 affordable flats in Barcelona in an aim to reach the minimum market share of 15%. Banks, the private sector (foundations), regional and local public companies and the social economy own some 20,000 properties that rent at a below-market price; however, these properties only account for little over 3% of the city total.

What politicians disagree with, as one might expect, is how to raise this figure to 15% of the city total. Ada Colau, despite her own background as an activist in the fight against evictions, promised to build 2,000 flats during her campaign for mayor. Only 150 of these flats have so far been built in her year and a half as mayor.

On the other hand, the current urban system, which revolves around a general metropolitan zoning plan written more than forty years ago (1976), only has land reserves to build some 20,000 more flats. Obviously, the numbers don’t add up and the lack of ambitious planning will likely fuel another bubble.

There is a certain tendency to blame the deficiencies of the housing market in major Spanish cities like Madrid and Barcelona on external factors. The global property renting network Airbnb, tourism and the pressure exerted by the avid money-making objectives of hotels are often blamed for the housing bubble. The political parties that formerly ran Barcelona or the city’s Olympic Games in 1992, during which the city sold off land to mitigate the public debt accumulated by hosting the games, are also blamed. But the truth is that nobody is addressing all of the aspects of the issue.

The times they are a changing?

The housing crisis could take positive advantage of the shift in trends. As pointed out earlier: Millennials are no longer averse to renting, at least for a few years. But there are many ‘if’s’. If there is enough land to build the 120,000 social housing units for rent that are needed; if there are banks willing to invent renting formulas with deferred rights to buy; if these homes are constructed using the best side of technology; and if flats stop being mere square meters fitted out in marble and parquet and instead become minimally equipped functional spaces, introduced into a community that shares costs and services, including energy; if transparency is required for the property development sector, forcing the publication of purchase prices, construction costs and sales prices, etc., then there is hope.

My personal opinion is that State and local administrations, now governed by political parties with opposing ideologies, will fail to agree on the diagnosis and lack the budgetary capacity to invest in the affordable housing that is urgently needed to be built. The solution will have to come from the social economy and a new generation of property developers willing to offer a new product for which there is both demand and available funds.

The role of administrations should be to control the value of the land, streamline the procedures for building construction and regulate the property sector for increased transparency. Importantly too, administrations should publish the real costs of construction so that consumers have verified information about the flats and houses they buy. There is also a need for complicity in the banking sector, which should remove abusive clauses and facilitate access to housing rather than full ownership. Times change, and new social demands emerge. Will Spanish cities be able to innovate accordingly?

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