This Research Bulletin has been published in International Journal of Urban and Regional Research, 34 (3), (2010), 611-628.
Please refer to the published version when quoting the paper.
This paper builds upon critical understandings of the role played by professional transmigrants and international capital flows in the production of urban regeneration sites. By understanding the role played by flows of international capital and networks of individual and institutional actors in the construction of an emerging luxury housing market, it is possible to demonstrate the ways in which place specific urban developments can be seen as the concrete manifestations of complex networks of transnational social and spatial relationships. On the one hand, such projects can be seen as being the material manifestations of a socially constructed ‘global urban utopia’ for the 21st century (Olds 2001: 6), whereas on the other, they can be seen as the producers and products of increasing socio-spatial polarisation, exclusion and segmentation. Additionally, the production of luxury residential spaces in post-socialist cities is indicative of wider processes of capitalist uneven development encouraged by processes of economic internationalisation and (neo)liberalisation during the 1990s further deepened, in the case of Prague, by the Czech Republic’s accession to the European Union (EU) in 2004. One of the most significant outcomes of these transformatory processes is the way in which such processes work through a set of actors and institutions that simultaneously create and destroy post-socialist space(s).
The encouragement of both gentrification and brownfield residential (re)developments by municipal level governance structures in the name of inter-urban competitiveness (see Brenner 2004; Harvey 1989; Leitner 1990; MacLeod 2002) has led to areas of post-socialist cities developing a radically differentiated social and class profile, whereby areas that were socially mixed under state socialism are transformed into gated and secessionary enclaves. These enclaves serve to accommodate both the emergent Czech middle classes and an increasing number of transnational elites, but also, more significantly I argue, they act as grounding and switching points for international financial capital. This has had the effect of creating a series of secessionary spaces (Graham and Marvin 2001) that are removed from traditional concepts of the local, forming instead a set of interlinked and highly exclusionary spaces that serve primarily the purposes of capital and international capitalists, serving to radically remake urban space in the process.
This paper concentrates upon two case studies drawn from a recently completed PhD thesis focusing on the socio-spatial impacts of transnational elites on the city of Prague (Cook 2007). The two companies discussed in this paper take the form of a real estate developer focused upon the regeneration of a specific district of Prague, Prague 8 (Real Estate Karlín Group, hereafter REKG), and a small (though expanding) real estate agency owned by a British entrepreneur (European Reality, hereafter ER)1. By examining the linkages between these actors, their wider relationships across space and time and the residential spaces they produce, it is possible to gain a more nuanced understanding of the sheer complexity of the networks, linkages and articulations that are present behind the glossy and fetishised façade of many contemporary luxury housing developments. Additionally, these case studies provide helpful insights into the relational and networked nature of both power and space, echoing Massey’s (1991; Massey et al 1999) concerns with (re)thinking the nature of the two concepts, as well as moving toward what Massey refers to as a relational and global sense of place. The following section will outline the transformations that have occurred within the Czech housing market since 1989 in light of the parallel processes of restitution, privatisation, liberalisation and internationalisation. This will serve to set the two in-depth case studies that follow in a wider historico-political context, before drawing the case study analyses together in order to make some generalised conclusions regarding the production and annihilation of post-socialist space, as well as some more specific conclusions relating to the place based transformations that have affected the district of Prague 8.
RESIDENTIAL TRANSFORMATIONS: HOUSING MARKET CHANGES IN THE CITY OF PRAGUE
There are certain similarities between different post-socialist states regarding the transformation of housing markets in terms of the processes of property privatisation (Grime 1999; Marcuse 2003; Priemus and Mandič 2000; Struyk 1996), restitution (Blacksell 2002; Fisher and Jaffe 2000; Musil 1995), internationalisation (Drbohlav and Sýkora 1997; Sýkora 1994) and increased residential differentiation and inequality (Kostelecky 1997, 2000; Steinfuhrer 2004; Sýkora 1996, 1999a, b). Situated within these wider processes of socio-spatial transformation is the Czech experience of the transformation process, and the specific case of Prague. By understanding the changing housing geographies of the Czech Republic, it is possible to examine how changes in ownership and tenure have impacted upon the housing stock through the construction of new properties, as well as the affordability of newly privatised property, and in turn make wider linkages into increasing social inequality within both Prague, the Czech Republic and Eastern Central Europe generally. By examining the complex processes of privatisation, internationalisation and restitution, and how these processes have affected the development of a market that, according to Sýkora (2003: 57), is positioned, “...between the state and the market”, the role of foreign capital in the production and consumption of housing can be situated more fully.
The most significant transformation to date has been the changing ownership and tenure structure of residential property, particularly within Prague. During the communist era, there were four main types of tenure; state, enterprise, cooperative and private housing. State owned stock during this period consisted of existing housing stock that was nationalised following the communist coup of 1948, and new build properties (generally prefabricated apartment blocks, or paneláky) constructed from the 1950s to 1991. It has been estimated that in 1960 45% of all dwellings in Czechoslovakia were state owned though by 1990 this figure had fallen to 40% (Sýkora, 2003). Eskinasi (1995) performed an analysis of the pre-1991 residential ownership structure for Prague, which demonstrates significant differences relating to the percentage of state owned properties in each of the major districts of Prague (see Table 1). Whilst these differences may not necessarily be seen as direct evidence of socio-spatial differentiation, areas with high proportions of state owned property pre-1989 have typically experienced the greatest impact of processes of privatisation and restitution.
Table 1. Pre-1991 Forms of Residential Property Ownership for Selected Prague Districts (Adapted from Eskinasi, 1994)
As can be seen, the areas of Prague with the highest concentration of state owned housing were Prague 1 (Malá Strana, Nové Město and Staré Město), Prague 2 (Vinohrady, Vyšehrad and parts of Nusle and Nové Město), Prague 3 (Žižkov and Strašnice) and Prague 7 (Holešovice and Libeň). Following the housing reforms of 1991, all state owned property was transferred to local municipal ownership, effectively decentralising the governance of property ownership throughout the Czech Republic (Sýkora 2003: 61). Following this transfer (in Prague, the transfer was made towards each city district), issues of restitution were taken in account, and what followed was a further process of ownership transformation. Property that had been confiscated from private owners by the communist regime following the 1948 coup, was returned to either the original owners or their closest living descendants, having particular impact upon areas of Prague that were previously characterised by high levels of state property ownership2. Following the return of property to the original owners, international capital played an important role in driving the housing markets within Prague 1, 2, 3 and 7 during the 1990s, as newly restituted property was either rented as office and commercial space to international tenants, or sold to international property developers (Sýkora and Šimoničková 1994).
In addition to traditionally high rental and purchase prices in the central districts of Prague, recent data published by King Sturge (2007) has noted that the purchase price of new-build apartments further away from the centre of Prague has increased by up to 21% between 2005 and 2006 (see Table 2).
Table 2. Average Price of New Build Apartments (KCrs / m2) for Selected City Sections (derived from King Sturge 2007)
As can be seen from this data, the most buoyant city districts in terms of new build apartments are located in districts near to, but not part of, the central business district, generally experiencing growth rates of between 10 and 20%. Districts such as Prague 3, 7, 8 and 9 are experiencing unprecedented growth in terms of purchase price, encouraged by the strength of the buy-to-let investment market that is estimated to account for between 10 and 25% of total new-build apartments sold (King Sturge 2007). These price increases are expected to slow during 2008, due to an increase in VAT on property from 5% to 19%, though forecasts indicate a steady growth of 6-7% for the city as a whole (Ibid). These rapid increases in house prices are generally mirrored throughout Eastern Central Europe and the Baltic States, linked to national variations in mortgage markets and consumer credit availability (Shelburne and Palacin 2006).
Contiguous with processes of privatisation and the decentralisation of housing control, has been the changing level of regulated rent within Prague. As demonstrated in Figure 1, the average maximum regulated rent has increased by approximately 1000% in nominal terms since 1989. Unfortunately there are no current statistics available concerning the number of dwellings currently subjected to rent regulation, though Buzhar (2005: 386) estimates that nationally, some 23% of the stock is subject to rent regulation whilst Sýkora (2003, 64) places the figure at between 20 and 25%, with higher proportions of regulated housing in major cities such as Prague and Brno. In many apartment buildings built prior to 19933, the regulated rents received by restituted landlords from their tenants barely cover maintenance costs and upkeep on the apartment blocks, leading to a growing ‘grey market’ of illegal subletting (Fibegerová 2005).
Figure 1. Average Maximum Regulated Rent in the Czech Republic, 1989 to 2002 (Derived from Sýkora, 2003)
In addition to the high levels of rent regulation, particularly in major urban areas, Czech tenants living in regulated apartments are entitled to unlimited tenancy contracts, which in turn lead to relatively low housing mobility and proportionately high rents and purchase prices within the non-regulated housing sector and in new build properties. Consequently, housing not subject to rent regulation (all new build properties are non-regulated) is unaffordable to many Czechs, a situation that is yet further deepened by the large size of the short-term letting market and the relatively high purchasing power of expatriate residents and overseas investors (King Sturge 2007).
Therefore it would be fair to say that by neither fully de-regulating the housing market or maintaining centralised control of it, the Czech government (both nationally and at the municipal scale) has created a situation characterised by internal contradictions serving to polarise housing into either relatively cheap, rental regulated property only available to Czech nationals, and disproportionately expensive non-regulated housing, often occupied by the burgeoning Czech middle classes, wealthy expatriates and short-term tenants. This decentralisation of governance structures (see Brenner 2004: 219-27 for a useful overview), particularly within Prague, has meant that municipal councils now have complete control over previously state owned property and land which is often sold on the free market to overseas investors (see the example of REKG and Prague 8 discussed below), and the lack of regulation of such practices can be seen as implicitly problematic due to the potential encouragement of dubious financial investment, but also as being emblematic of a capitalistic economy. Such practices, whilst not as well documented as the widespread ‘tunnelling’ of capital and assets from former state owned property and companies that occurred during the 1990s (Altshuler 2001), are nonetheless problematic in relation to the housing market. Indeed, derelict industrial and run-down residential properties are purchased extremely cheaply and not necessarily under free-market conditions, and such property is often demolished and replaced by luxury apartments that further tighten what is an already constrained affordable housing market.
Indeed the short-sighted nature of municipal housing policies in Prague may well have significant ramifications at a wider scale, due to the deteriorating nature of the country’s communist panelák housing (see Alda 2008), cuts to municipal repair budgets (Ibid) and a simultaneous lack of affordable private housing (Reynolds 2005). The following section will provide a discussion of the role played by two major actors in the ‘regeneration’ of Prague 7 and 8 and one of their key developments, River Diamond. The aim will be demonstrate the complex flows and articulations of capital and actors that coalesce to materially transform post-socialist space, and also to draw some conclusions regarding the relationalities of space, place and power in post-socialism.
TRANSNATIONAL HOUSING AND THE PRODUCTION OF SECESSIONARY ENCLAVES: THE SPATIAL (RE)PRODUCTION OF PRAGUE 8
Following on from the previous discussion that outlined the transformations of housing that were affected by various processes of post-socialist transition, this section is concerned with the specific character of luxury housing in Prague. It is possible to delineate a number of different developmental typologies of housing development within the city. Processes of gentrification are particularly prevalent in inner city of Prague, particularly in Vinohrady, Malá Strana, Nove Město and Stare Město, and more recently Vršovice and Žižkov (Sýkora 1993). Exclusive, gated suburban developments are also in evidence on the urban fringe (e.g. Malá Šarka, Prague 6) and new build brownfield developments such as River Diamond, Prague 8, are increasingly prevalent in former industrial and working class neighbourhoods. The production of new build gated housing in both suburban and inner city contexts is particularly significant in Prague’s urban transformation, creating gated secessionary spaces that foster narratives of socio-spatial exclusion and polarisation. Such developments have been widely reported as evidence of Americanisation and many studies have been undertaken on similar gated communities globally (see Blakely and Snyder 1999; Wu 2004 and Roitman 2005 for illustrative studies). Additionally, the internationalisation of financial capital and a set of transforming regulatory regimes have increased capital mobility and have created a situation whereby:
Such an argument echoes the work of Olds (2001), which focused on the culture-economy of urban megaprojects, and whilst the developments discussed below cannot necessarily be seen as falling into the same category as mega-projects in the Pacific Rim, the scale of the redevelopment of Prague in a regional context is significant. It shares many of the traits defined by Olds (Ibid: 6) in terms of the role played by international finance, the homogeneity of design types, elitist marketing strategies and the attempts of property developers to create a global urban ‘utopia’ for the twenty-first century. The following two case studies aim to de-mystify the key institutional actors in the redevelopment of Prague 8 and their wider networks and webs of association.
Case Study 1: Real Estate Karlín Group and the Re-Classing of Prague 8
Real Estate Karlín Group (REKG) is a real estate developer with significant property interests in two specific parts of Prague, Karlín and the neighbouring district of Libeň. These two districts together form Prague 8 and parts of Prague 7 and both have a rich industrial and working class heritage, encompassing areas characterised by the now derelict Prague Docks and a significant proportion of Prague’s heavy manufacturing industry that is now in decline. This heavy industry centred on several ČKD4 plants that specialised in the manufacture of train carriages, locomotives and tram cars for both the Czech and Eastern Bloc markets during the era of state socialism. Nowadays Karlín and Libeň have been (re)scripted and (re)placed by REKG as being:
Of particular relevance here is the way in which REKG have invoked the ‘genius loci’ of Karlín and Libeň, by placing the current redevelopment in an historical context that both romanticises the industrial and working class heritage of the district, whilst at the same time destroying it. Indeed, if ‘genius loci’ is interpreted as meaning the spirit of place, or more classically, the protective spirit of place, then it is somewhat problematic to see how the construction of new build luxury apartments (such as River Diamond, discussed below) is sympathetic to the industrial and working class heritage of the neighbourhood. Figure 2 provides evidence of the transforming character of Karlín, in particular the dereliction of apartment blocks and the emergence of transnational style glass and steel office developments.
Figure 2. Regeneration in Karlín, Prague 8 (Photographs taken by the author, April 2005)
REKG was formed in 1997 by Serge Borenstein (a Belgian entrepreneur) and Charles Butler (a British investment banker), who co-founded M2 Real Estate in 2003, and the Marc Rich Real Estate Group (MRREG), a subsidiary of Marc Rich and Co Holdings. Perhaps the most significant of these three actors is MRREG, a company owned by the infamous combat trader Marc Rich who was indicted in 1983 by then US President George Bush for tax evasion and illegal commodity trading (Copetas 1985) in addition to a number of other legal violations (Vickers 2005) relating to tax fraud and arms dealing. Prior to his indictment and subsequent flight to Zug, Switzerland (where MRREG is based), Rich was a pioneer of ‘combat trading’, whereby commodity traders gained (often exclusive) trade rights from countries undergoing political, economic and social turmoil. Nowadays, Rich remains a resident of Switzerland and is a 50% silent partner in REKG (Mainville 2001) along with active partners Borenstein and British investment banker Butler. Prior to Rich’s involvement (albeit silent) in Prague’s real estate market, he attempted to purchase a Czechoslovakian aluminium company in 1991, once more pursuing his philosophy of combat trading given the possibilities offered by the collapse of state socialism in Eastern Europe (Copetas 1985; Herod 1995). This takeover was prevented by a personal intervention from the then Czech President Václav Havel, following pressure from Czech metal workers lobbying through the International Metalworker’s Federation (Ibid 352). The financial presence of Marc Rich in the Czech Republic has not raised any alarm, or indeed any concern. According to Mainville (2001), the American Embassy was unaware of Rich’s business interests in the Czech Republic, and a spokesman for the Czech Government’s investment agency was quoted as saying, “...the government does not monitor the activities of foreign companies here. That would be discriminatory”. Such empathy to the business activities of one of the most controversial and notorious business figures of the last 30 years is nothing short of astounding, particularly when Keith, owner-manager of European Reality (ER) alluded to endemic municipal corruption, linked to REKG:
The fact that such practices were greeted with a casual shrug of the shoulders and a throwaway acceptance of the implications of corruption should be seen as disturbing, not only due to the potentially dubious nature of the financial capital that REKG are investing in both Karlín and Libeň, but also to the immense profits that are expected to be made in the process.
Whilst it is important to highlight the nature of the business practices and associations behind REKG’s business interests, it is equally important to understand some of the spatial implications that their developments are having upon the district of Prague 8. Currently completed projects include both residential and commercial developments throughout Karlín, located in both refurbished former industrial property as well as new constructions, the flagship of which is the River Diamond Development (See Figure 3).
Figure 3. River Diamond Residential Development (http://www.riverdiamond.cz/galery.php).
This development is managed by Riverbank Development (River Diamond 2007), a company set up as a partnership between Serge Borenstein and Thomas Samii (an American real estate lawyer), but drawing upon funds provided by REKG. The development consists of a number of new build apartment blocks facing across the River Vltava and, according to Keith, whose company European Reality, deals with the agency side of the development outlines:
Indeed, when fully completed, the complex will contain a fitness club, a number of gyms, access to tennis courts and a golf course, as well as secure underground car parking and 24 hour security. The development is, “…specifically aimed at expats, top management and Czech directors”. Purchase prices per square metre within this development range between 80 and 105,000 Czech Crowns (hereafter KCrs) per square metre (£1900-2500). The most expensive property available within the development is currently for sale at just over 20,740,000KCrs (c.£490,000), and clearly is only a realistic purchase for wealthy expatriates or the richest Czech nationals. This development can be confirmed in its status as an elitist and secessionary space (Graham and Marvin 2001) by comparing the pricing to average property prices in Prague 8. The average purchase price per m2 for new build apartments in the district is approximately 50,000KCrs7 (c.£1500) whilst older flats average at approximately 40,000KCrs (c.£1200) per m2. In addition to this, the average wage for individuals working within the highest paid sector of Prague’s economy, financial intermediation, was 408,048KCrs (c.£9600) per year (ČSÚ 2005), therefore even a wealthy Czech citizen has little chance of owning such a property as it would cost some 50 times their average annual salary.
Clearly, River Diamond – and many of REKG’s smaller projects – is evidence of the creation of a landscape of economic and social exclusion that is simultaneously destroying the urban spaces of state socialism, and creating in its place a series of secessionary spaces retrenched behind the very real barrier of real estate pricing, physical barriers and security systems. The contribution made by such developments to debates concerning transformations of the historical character of neighbourhoods (in this case from a socially mixed neighbourhood to one defined by affluent middle class professionals), echoes much of the research conducted on similar projects in established global cities such as London and New York (Smith 1996). In terms of the re-classing of the district in favour of wealthy middle class residents, the processes at work in Prague 8 are occurring throughout the city, though Prague 8 is a particularly relevant example. Neil Smith’s work (1996; Smith and Williams 1986) has demonstrated how processes of gentrification and inner city regeneration contribute to the formation of a fragmented and revanchist city that has become representative of the contemporary capitalist city. Until recently, Prague’s ‘gentrification frontier’ lay at the Eastern edge of Vinohrady, with occasional processes of revitalisation occurring beyond it in Žižkov and Vršovice. Nowadays the frontier extends as far as Vysočany and Libeň, again areas traditionally occupied by the Czech working classes, as Jack8 elaborates:
The following case study will build upon this examination of the role played by property developers in the reconstruction and regeneration of Prague 8 through an exploration of the role played by an emerging, British owned real estate agency and property management company, European Reality.
Case Study 2: European Reality: Practising Exclusion
Having mentioned briefly in the above case study the role played by European Reality (ER) in the redevelopment of Prague 8, it is necessary to develop in further depth ER’s history and broader role with Prague’s real estate market. In 2005 when the interviews included here were conducted, ER was a small but ambitious company, set up in 2003 by the aforementioned British entrepreneur, Keith. He used to work for a telecommunications company in Prague during the early 2000s, setting up European Reality to fill what he described as the ‘niche’ in real estate customer service that existed in Prague, encouraged by the poor way he had been treated by real estate agents during his stay in the city. In 2005, the firm employed six full time bilingual staff which Keith saw as a necessity of doing business in Prague, despite the fact that he himself cannot speak Czech. ER consisted, in 2005, of a rentals division referred to by Keith as, “…the gentleman you saw [in the office] next door”, a one-man accountancy department and several other negotiators and real estate agents. Nowadays, the company has expanded significantly employing nearly twenty people and having a property management portfolio with an approximate value of €185 million making ER “Prague’s largest rental and property management team” (European Reality 2007). Unlike REKG, ER purely acts as a real estate agency, focussing entirely on new build apartments as this avoids contact with Czechs generally and Czech landlords specifically. Indeed, the complexities perceived by Keith relating to transactions involving Czech owned apartment buildings has influenced Keith’s business strategy:
Keith’s rationialisation of what is essentially casual racism is bound up with what he perceives as a set of poor experiences of negotiating with Czech property owners, deepened by his own apparent lack of familiarity with the historico-political aspects of local business culture and a complete lack of Czech language skills. As he elaborates:
The ‘problems’ that Keith experienced has encouraged him to move away from any dealings with Czech landlords, companies or individuals, focusing largely upon the buy-to-let market aimed at foreign investors. As he noted, this means that he only deals with, “…very organised, very well set up, very professional [companies]”, specialising in new build developments.
ER essentially acts as an intermediary between foreign investors (both institutional and individual), potential tenants and property developers, fulfilling a variety of functions for each of the parties. In 2005, Keith worked with two medium sized UK investment firms, Prague Property Secrets (PPS)9 and Prague Property Investments (PPI)10, who purchase large numbers of flats in new developments to either sell or rent (via ER) to private clients. For example, according to Keith, in a new development of some 200 residential units, one of these companies would typically purchase 60 or 70 to sell to individual investors in the UK, who would then look to rent these apartments out, using ER as the property management company and rental agency. Whilst many new developments are granted planning permission on the basis of urban regeneration and the provision of new housing stock, the reality is that many apartments are purchased by overseas clients, site unseen, involving transnational circuits of capital speculatively purchasing property (see Ball 2007 for a useful overview of speculative investment regionally) with no guarantee of finding tenants. Indeed similar processes are occurring in Jinonice, Prague 5 whereby Russian capital has stimulated an increase in new build apartment construction, and these new properties are purchased, held by the owners and then sold on to another investor at a higher price11. Such a process means that certain developments of this district of Prague are uninhabited throughout the year.
Keith’s specific role within these circuits of capital is to pitch new developments to clients (PPS and PPI for example) on behalf of the developer (for example REKG), and to source tenants and perform agency and landlord functions for the new owners and tenants. These agency functions include mortgage brokerage, securing residency permits, setting up and registering a Czech company parting the name of the purchaser (a legal requirement in the Czech Republic for foreign property owners) and performing property management functions on behalf of the (often) absent landlord. Therefore, ER’s emphasis is placed firmly upon the buy-to-let market, dealing with a largely foreign group of investors, landlords and tenants (see Figure 4 for a schematic representation of ER’s role within Prague 8). Such practices are indicative of an increasingly internationalised set of property and financial markets that are spatially manifested through the production of exclusionary and secessionary residential spaces catering an emerging class of young professionals and ‘virtual’ residents.
Figure 4. Schematic Diagram of the Prague 8 Real Estate Complex.
ER’s property portfolio focuses upon 3 distinct bands of property and classes of tenant or owner. These differences are based both upon the physical location of the property within the city, as well as upon factors including the aspect of the property, the presence or absence of secure parking facilities, the floor on which the property is located, as well as the local amenities and conveniences12. The so called ‘Band 1’ properties typically sell for 30-38,000KCrs per square metre and are rented out for approximately 11-13,000KCrs per month (£320 to £380) and are aimed at potential Czech tenants as the rental price is not out of their price range. Such properties are not aimed at expatriates at all, though Keith may well get several interested tenants, he admits that such properties are not targeted at the expatriate market. The second, intermediate band of properties, retailing for between 50-60,000KCrs per square metre and renting for approximately 20,000KCrs per month (c.£580) is aimed at the ‘aspiring middle classes’. Most of the properties dealt with by Keith in this category are located in Karlín, Prague 8, targeted at Czech professionals – doctors, dentists, lawyers, what he terms, “…your classic trades”, but primarily the expatriate market. The final band, or the ‘top end’ consists of Penthouse apartments located in specific developments such as River Diamond in Prague 8. These apartments are aimed at wealthy, high earning Western expatriates and diplomats, who can afford to buy a one bedroom flat for 7,000,000KCrs (c.£170,000) or pay rent of over 43,000KCrs per month (c.£1250). The fact that ER does not have a property development section, does not serve to remove the firm from the network of actors that is so substantially transforming the district of Prague 8. By acting as the intermediary between international investment capital, the Czech Government (for work permits and company formation duties) and foreign tenants, ER is complicit within the creation of both an exclusionary real estate market as well as a series of exclusionary spatial forms that are transnational in style (Olds 2001) and serve annihilate the historical character of certain districts.
This paper initially began life as an attempt to demystify the role played by Western expatriates in the production and consumption of luxury housing in the city of Prague. However, as the research progressed it became clear that what started life as an illustrative and locally focussed project has the potential to contribute to wider debates within human geography. First, the institutional history of REKG and the complex associations it has with international financiers, the geopolitics of commodity trading, real estate developers and agencies, as well as with municipal governance structures in Prague, indicates the sheer complexity and topological nature of property development under late capitalism. Policies of neoliberalisation and privatisation, pursued during the 1990s and 2000s in the Czech Republic, have had the effect of encouraging unregulated international investment in Prague, leading in turn to a tranche of new commercial and housing developments that are transnational in terms of both aesthetics as well as the actors and institutions involved. Such developments, whilst ostensibly contributing to urban ‘renewal’, ‘revitalisation’ and ‘regeneration’ are in fact the outcomes of contemporary processes of capitalistic uneven development (Smith 1991) that are serving to remake and ‘reclass’ certain city districts. The spatial manifestations of such processes can be found in developments such as River Diamond, which can be seen as both illustrative and indicative of the revanchist and secessionary spatial forms that such processes produce.
Second, such developments are inherently exclusionary, both in their specific spatial form as well as the ways in which the property market has become polarised, both in terms of pricing, but also by nationality. The aesthetic employed by architects and developers in the construction of new build housing in Prague 8 can be best described as ‘transnational revanchist’, and has little to do with spatial location or notions of a locally rooted place but concentrates upon the provision of CCTV, video entry systems, a bi-lingual reception desk and secure underground car parking. In addition to the material contribution to exclusionary narratives provided by these features, developments such as River Diamond are further retrenched behind the realities of real estate pricing that serves to price out all but the most affluent consumers. The dominance in the luxury real estate sector of foreign owned firms (developers, agencies, marketing companies and investors) and their networks of association, as well as the fact that such institutions and actors generally only target foreign clients for their products, produces an exclusionary market, essentially removed from any regulatory frameworks, and ultimately from any meaningful responsibility. These processes of physical and financial exclusion are highly problematic, especially in light of the housing shortage expected to hit Prague in the next decade.
Third, the role of housing developments as fetishised commodities has also been demonstrated. The networks of actors and capital that have contributed to the production of projects such as River Diamond are concealed and masked by marketing campaigns and branding, not to mention by the double height windows, views over the Vltava River and the ‘luxurious’ features on offer. By demystifying and unveiling the fetishised exterior of one such development it has proved possible to link the development (and more specifically the capital that it represents) into spatio-temporal networks incorporating alleged illegal commodity trading, alleged municipal corruption and the former US President Bill Clinton. Whilst interesting on the surface, such demystification indicates that further regulation of international financial markets may be required especially given the potentially dubious nature of the capital involved.
Finally, the case studies discussed here serve to demonstrate the weaknesses of thinking through space and place in closed and binary ways, serving instead to argue for a conceptualisation of space and place that as open, heterogeneous and relational. By focusing upon a major ‘local’ urban development, it becomes clear that that the flows of capital, actors and institutions involved in producing this space are tied together in complex ways that manifest themselves materially behind the luxurious façades of Prague 8. These places are in fact the (semi-)permanences that arise through complex skeins of interactions and interrelations. As David Harvey (1996: 261) puts it:
Indeed this demonstrates how particular spatial formations and places appear permanent but are in fact constantly being (re)made and (re)worked. This paper has intimated at how scale and power can also be conceptualised as being relational, eschewing notions that power is centralised and that scale consists of nested hierarchies (corporeal, local, national, regional, global etc) or as simple binaries (global-local). Indeed the developments discussed here in Prague 8 can be seen as the material crystallisation of complex, relational ‘power-geometries’ (Massey 1991) produced through equally complex actor-networks serving to destabilise commonly held notions of how place, power and scale are conceptualised and realised.
Particular thanks must go to the Central Research Fund of the University of London, the Foundation for Urban and Regional Studies and the Dudley Stamp Memorial Fund of the Royal Society for funding the PhD fieldwork from which this paper is drawn, as well as to Queen Mary University of London for providing a fully funded PhD studentship between 2003 and 2006. Additionally, thanks are due to CRCEES and the University of Glasgow for funding a Post-Doctoral Fellowship that has allowed the author to concentrate on publishing this material. Also due to Adrian Smith, Dave Gilbert, Kathrin Hörschelmann and Alison Stenning for their insightful comments on previous variants, to Adam Swain for critical discussions of criminal economies and to Ranald Richardson for (re)introducing me to the concept of secessionary space. Any errors of fact and/or interpretation are the responsibility of the author alone.
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1. Whilst interview material used throughout this paper has been anonymised and the names of informants changed, the names of the companies and actors have not for reasons of transparency.
2. The confiscation of privately owned property by the state in 1948 was most widespread in city districts seen to be the most ‘bourgeois’ by the communist party. Therefore, the areas described by Moschelles (1920, 1937) as being ‘socially strong’ experienced property confiscation the fullest. This process was then reversed in the early years of the 1990s when again these districts experienced the greatest changes of both ownership type, and in Prague 1 especially, a change in use type.
3. Apartments constructed post-1993 in the Czech Republic are not subject to rent regulation.
4. Česko-moravská Kolben Daněk.
5. Interview with Keith (05/05/05), CEO of European Reality. The author is currently researching the links between the purchase of land in Prague 8, the collapse of both the engineering firm ČKD and the Czech bank IPB, and the complex network of associations that led to Belgian bank KBC Holdings taking over both IPB and it’s parent company ČSOB in 2000.
6. Interview with Keith (05/05/05)
7. This data is based upon King Sturge (2007) and the authors own data.
8. Interview with Jack, a teacher at the International School of Prague (16/04/05)
9. Available online at http://www.propertysecrets.net [last accessed 28/02/07]
10. Available online at http://praguepropertyinvestments.net [last accessed 28/02/07]
11. Interview with Jack (16/04/05).
12. Interview with Keith, dated 05/05/05.
Note: This Research Bulletin has been published in International Journal of Urban and Regional Research, 34 (3), (2010), 611-628