Changing public space

uildings and to emphasise that they are not only interested in high returns. Nevertheless, profits
remain the primary motivation for property developers. As Nappi-Choulet explains:
As the process is typically very long-term and involves large amounts of money, the
risks are usually large. Developers and investors thus need an appropriate return rate to
compensate for the risks and the immobilisation of their capital. They will put money
into the project because they believe the property will ultimately yield substantial cash
flows and capital appreciation …. (Nappi-Choulet, 2006: 1513)
In the Netherlands, the greater involvement of developers in public space redevelopment projects
can also be ascribed to the relatively small size of the country (only 41.526 km 2 compared to,
for example, Germany (356.970 km 2 ) and France (543.965 km 2 )) and its national policy to resist
peripheral retail development. Since 1973, there are policy guidelines to restrict large-scale retail
developments on the edge of cities. These guidelines were implemented to protect the traditional
retail hierarchy in which the city centre is the dominant shopping location. This way the
government tried to avoid the drain effect from the city centre to peripheral retailing that was
visible in other countries, such as the US. Only recently, this policy has been slightly loosened in
the Nota Ruimte report (VROM, 2004). As a result of the country’s small size and retail policy,
land is scarce and redevelopment of existing city centres (‘replacement demand’) is necessary
rather than continuous development on ‘greenfield sites’ at the periphery of cities (‘construction
demand’). Although redevelopment projects in city centres are generally more difficult than
urban expansion due to the large number of actors and institutions involved (Korthals Altes et
al., 2003), property developers are eager to participate. They anticipate that the scarcity of land
and the prominence of city centres as retail structures will yield high returns.
While developers create property, investors acquire it upon completion. They manage the
buildings and surrounding public spaces themselves or employ a management company to do the
job. In the Netherlands, like elsewhere, banks have traditionally been the main source of finance
for the property companies by providing long-term loans. Some of the banks – for example
ING – have both a development and an investment branch; they could initiate and finance a
project on their own. However, such in-house projects are rare because they could undermine the
professional reputation of the bank.
Apart from banks, there are other types of investors: pension funds, life insurance companies,
and large stock-market-listed property companies (Appendix E). Each of these types has its own
objectives, sources of funding, tax regime status, and behaviour in the property market (Guy &
Henneberry, 2002). Pioneer investors in urban regeneration favour speculative building associated
with high returns of a very short period. In contrast, investors who do not participate in urban
regeneration generally invest in pre-let assets over a longer time-period basis, while expecting
lower returns (Nappi-Choulet, 2006). What they have in common is their aim to guarantee
capital growth of the stakes of the insured, pensioners, or shareholders. Due to its stable value,
real estate is often selected as an asset to purchase; it can generate a regular, reliable income
stream (De Boo, 1996; Guy & Henneberry, 2002).
The achievement of high returns on investment has generally been considered the primary
criterion of the investment-making decision in real estate literature (Nappi-Choulet, 2006:
1533). The motives for investors to invest in public space are therefore similar to those of the
property developers: they also acknowledge that public space influences the market appeal or
rental potential of their property. Investors are dependent on the activities of their renters or
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