In Part I of this entry on the interrelated news items addressing the Luxembourg real estate market last month, four different vignettes were presented that indicated the extent to which urban development in the capital city is more and more driven by external if not global actors, money, and interests. The news items were a response of sorts to that phenomenon and in their entirety, they illustrated how land is becoming a key commodity across development circuits. In conclusion, the overarching question now is: What do these different narratives tell us about Luxembourg and the Greater Region? Or, breaking the question down further still: 1) What sort of city are we dealing with here? 2) What are the local implications of global urbanisation processes? 3) How does or should policy and planning deal with the related challenges?
1 Firstly, one of the fundamental consequences of reflecting on these issues is that one has to accept the fact that the character of the capital city is something utterly specific: This is not a usual city! A place that administers billions of Euros is hardly an ordinary city. It is hardly just another place housing circa 140,000 people networked in a local sphere of mutual interdependences, the so-called Agglo-Lux. Its political role as the capital of a small country, which is globally connected and regionally situated close to borders, renders it more of a proto-type “city-state formation”. It has more in common with the small, but rapidly growing, desert capitals such as Doha, Qatar, or Dubai, UAE, than it does to neighbouring cities of comparable size such as Metz, France, or Trier, Germany. In terms of governance, this city-state formation was lucky enough to make the “most of smallness”(1), by offering a variety of innovation policies, a business-friendly climate and short distances to decision-makers. Here, making a fortune out of smallness means pursuing economic niche strategies that can be set in place primarily thanks to political sovereignty.
The secret to the success of such places is the consequence of multiple factors. Among these, historical path dependence and path creativity play a role, but so does the successful insertion into services value chains, particularly the attraction of financial industries, and increasingly digital processes, products and infrastructures. These assets are not necessarily developed based on the principle of agglomeration, but it looks as if relationality is key to the ability of smaller places to get on the radar of global players and money flows.(2) Relationality means that powerful actors at state and local levels – both entrepreneurs and the agents of the entrepreneurial state – are able to connect to the rest of the world, attract investments, and trigger subsequent paths of development. These might sometimes be difficult to plan for: They initially happened more or less accidentally. However, they were then understood as an opportunities whose potentials were later fostered. Thus, they contributed to the making of a small hotspot in big global business.
It seems contradictory that cities can be small but global. However, some of these small places, as the ones named above, have developed rather rapidly, revealing an astonishing pace of, and openness to, change. This is the more general, not Luxembourg-specific, dimension of the issue. Of course, globalization provided a major pre-condition for globalized city-state formations to emerge. However, things have changed recently, particularly since Trump and Brexit. For some reason, open markets and globalization politics and rhetoric are increasingly questioned. The imperative of globalization seems less powerful than it once was, for good or bad reason. Also, the asymmetries between urban size and function (or power) as deployed by these smaller cities are more than obvious. So there is good reason to overcome the rhetoric of global cities that consistently addresses the usual-suspects, and focus more on highly specialized minor capitals such as financial market places, tax havens, logistics hubs, and the like. The related dynamics create places that are different from our usual imagination of what a city tends to be. They are extraordinary in certain ways – even though Peter J. Taylor once stated that judging from his perspective, all cities are somehow extraordinary.(3) The least that one could say is that many of these places are truly exceptional. Or, can you find any other city where almost every corner is reachable by bike, while at the same time, globalization provides a local airport that offers seven or eight regular flights to London, UK, per workday? Not very many, probably. It’s time to seriously acknowledge these specificities of the place, before getting closer to ‘solutions’.
2 Secondly, if we understand the globally embedded capital city as a relational construct, thus going beyond usual stereotypes of urban places and their spatial fixes (urban design, public space, ‘cities for the people’) – what then are the local ramifications of this phenomenon? In a previous blog post on mobility issues mostly related to the site of the new Campus Belval, some of the causal mechanisms that drive the country’s spatial development were already mentioned. Following these considerations, Luxembourg’s business model is conceived of as being geographical by nature, where the small country is, firstly, surrounded by larger neighbours that provide the labour pool for its expanding economy. Secondly, the increasing connections established to the global economy lead to a spatial imprint of the small country that is much larger than its surface area of 2,500+ km2 may indicate.
The associated impact of the globalized place on physical space, infrastructure systems, and arteries that ensure the seamless flows of all the items that keep the country’s economy going is massive. It’s a trivial (not banal) truth that the enabling systems for operating a top services and financial industry location are necessarily material: One needs educated staff, land for buildings and offices, accessibility etc. Housing is certainly included here as well, and the bitter truth is about scarcity in quantitative terms (partly due to the provision of office not housing areas), and qualitative standards that are limiting affordability. Offices, condos, related services for the services class are thus increasingly dominating the built environment of towns and cities. The enormous degree of construction that is observed in some of Luxembourg’s hotspots (the capital city, Belval, and many more projects emerging at smaller scales) is an immediate outcome of the relational profile of the city-state formation called Luxembourg. Likewise, the huge sites that have been developed in the past, such as Plateau Kirchberg, are a good illustration of the spatial needs of the white-collar industry.
Another interesting impact revealed by the cases of the Oberstadt and Etoile, which were part of the first of these two blog notes, evolves from the fact that the city’s financial market and the real estate market are getting closer together, even though they have evolved rather separately. Maybe this is random, maybe it’s an outcome of the increasing financialisation of the urban, maybe it’s simply because the huge amounts of money administered here also seek a secure place to land. For that purpose, the Grand Duchy seems extremely well suited, given its stable political environment and the stunning growth prospects for the near future. Thus, it seems rather likely that big global money will not only continue to pass through for the sake of its multiplication, but that it will also settle in with further investment in bricks and mortar.
This impact threatens to become even more delicate, since actor constellations in Luxembourg are different from the usual global city, where foreign currency swipes away at local residents and their interests, unfolding as a clear black and white pattern that evokes the contentious meanings of “us” and “them”. Here, the alliance between land and money is more complex, as it is still driven by the autochthone; that is, it is orchestrated by a mélange of local property owners, real estate industries, financing, and political representation of most parties. The divide is not between the global and the local, but probably between the roughly two halves of the society: the one that has land resources and political power, and the other that has to pay an increasing price for realising the mere right to find habitat, while being mostly excluded from political decision-making. So, the higher the pressure gets on the “system,” the more lucrative it tends to be at least for some of the actors involved here. Why should they claim for change?
3 Thirdly, in light of these interpretations, an important question is whether planners and politicians are aware of these changes, and how spatial planning should respond to them. Is planning sensitive to the peculiarities of the economy and the links to the real estate market? Not really. Indeed, spatial planning is still at work in this country, both at state and municipal levels.(4) However, any attempt to keep pace with the pressure and speed of growth and development must be limited. The most striking issue here is that the political economy is absent from local analyses of urban issues and related problems: There is little or nothing heard that addresses the causal relationships between socio-economic and political-economic framework conditions and practices on the one hand, and the obscure ways development is pushed forward on the other hand, particularly by providing more and more office space for the services sector. Land speculation is as absent from urban and planning discourses, just as Luxleaks and Panama Papers were also mostly ignored by general debates some time ago - despite their significance with respect to the country’s efforts in being a trusted place for doing business.
Conceptual approaches for spatial planning are hardly visible. If they exist at all, then they are shifting between the generic and the specific, between domestic and international frames, between high ambition and more formal instruments, and they are without robust orientation. One continues to compare the capital city and/or the country with metro areas such as Brussels, Copenhagen or Paris, and continues to seek and collect “best” practices – as if these could be easily implemented in an entirely different, highly specific environment (as explained above). Irritation at the level of institutionalised planning adds to the problem. It is probably fair to say that the tradition of planning in this country is by and large authoritarian, and that public participation (or better, consultation) arrived on the agenda only recently, in a sort of hasty attempt to compensate for long lasting deficiencies. However, planning is yet understood as a means of defining the one ultimate solution for future development, and not as a method of finding the well considered choice between different alternatives.
The consensual (and thus hegemonic) bottom line is urban design, welfare politics, and the negation of conflict and contradictions. The ‘real’ causes of the problem – i.e. the concurring demands on land use, that reflect different sets of economic resources and political power that target different consumers – are rarely emphasised. Plans and policies should be negotiated between authorities and civil society etc. Such approaches, understood in strategic and not deal-making (!) terms are still missing here. It is then only consequent to expect that the related problems on real estate and housing markets, which inspired this two-part blog, will remain as pressing as they currently are.
1) Thanks again to Adam Grydehøj for providing this wonderful phrase:Grydehøj A. (2011) Making the most of smallness: economic policy in microstates and sub-national island jurisdictions. Space & Polity 15(3), 183-196.
2) For introducing the concept of the relational city, see Sigler, T. J. (2013) Relational cities: Doha, Panama City, and Dubai as 21st century entrepôts. Urban Geography 34(5): 612-633; and Sigler, T. J. (2016) After the ‘world city’ has globalised: Four agendas towards a more nuanced framework for global urban research. Geography Compass 10(9): 389-398. As applied to this country: Hesse, M. (2016) On borrowed size, flawed urbanisation and emerging enclave spaces: The exceptional urbanism of Luxembourg, Luxembourg. In: European Urban & Regional Studies23(4), 612-627.
3) Taylor, P. J. (2013) Extraordinary cities: Millennia of moral syndromes, world-systems and city/state relations. Cheltenham, UK: Edward Elgar.
4) See the short country report on the state of planning and planning education, Hesse, M. (2015) Luxembourg.In: disP – The Planning Review51(1), 54-55.