How Mortgage Investment Impacts Urban Renewal

Urban renewal is the concept or strategy to address urban challenges. These challenges range from inadequate housing and deficient infrastructure to traffic congestion and crime. Urban Renewal aims to revitalize and transform urban spaces, creating sustainable communities. 

What is Urban Renewal?

Urban renewal is a proactive scheme designed to rectify numerous urban issues. The focus encompasses unsanitary and obsolete housing, inadequate transportation, deficient services, haphazard land use, and the broader societal consequences of urban decay. Most Urban Renewal initiatives focus on housing reform and public health measures or the relocation of population and industry from congested to less-crowded areas.

There are many reasons for Urban Renewal. These are a few of the main motivations behind these projects and initiatives:

• Aging and Obsolete Buildings – Urban renewal becomes necessary when buildings become obsolete or dangerous. 
• Aging Infrastructure – Aging infrastructure, both public and private, is a common challenge in urban areas.
• Increased Building Standards from Change of Use – Changing the use of buildings often requires adherence to higher building standards. This is seen in many areas where urban development aims to repurpose industrial buildings into private residences.
• Necessary re-development – In areas such as Victoria, BC, redevelopment is essential as the population grows, and there is a limitation on the amount of urban sprawling that can occur. MICs are involved in many high-density projects in urban areas that need to use space more effectively. 
• Land Cost – The cost of land in urban areas tends to rise, adding to the overall cost of development. MICs play a role in financing projects that might be financially challenging due to the escalating land cost.

Historical Examples of Urban Renewal

Historically, urban renewal has taken various forms, often adapting to the unique challenges different cities face. The garden-city and new-towns movements in Great Britain showcased efforts to relocate population and industry to alleviate congestion. Conversely, the U.S. witnessed ambitious projects like redeveloping industrial or decaying neighborhoods, aiming to transform them into thriving, functional spaces. Each country’s approach to urban renewal is shaped by its means, political landscape, and administrative systems.

How Mortgage Investing Impacts Urban Renewal

1. Financing Redevelopment:

Mortgage Investment Corporations (MICs) serve as financial catalysts for urban renewal by funding redevelopment projects. Through the clearance and rebuilding of deteriorated or obsolete structures, MICs contribute to the physical transformation of urban spaces. Many projects within a MIC are also land loans where developments may take place in the future. 

2. Reuse of Land for New Purposes:

MICs can help developers by lending to projects that breathe new life into underutilized or undervalued public assets. By raising capital from various investors, these funds help developers to acquire, build, and manage properties efficiently and professionally.

3. Rehabilitation of Structurally Sound Buildings:

Urban renewal involves not only tearing down but also reviving structurally sound buildings that may have lost their original functions. MICs participate in rehabilitation and renewal by funding projects that intend to redevelop land efficiently for contemporary needs.

Real Estate Funds as Catalysts for Urban Renewal

Real estate funds, including MICs, are potent financial tools for promoting urban renewal. Governments can face challenges in financing urban infrastructure. Private funds offer solutions by efficiently supporting developers looking to renew and upgrade regions or properties of an urban area needing development.

The synergy between mortgage investment and urban renewal is evident in the transformative impact on communities. Through strategic financing and redevelopment initiatives, Mortgage Investment Corporations contribute to the physical rejuvenation of urban spaces and the economic and social well-being of the communities they touch. Urban renewal, when powered by sound mortgage investment, becomes a force for positive change, creating sustainable urban landscapes that the community is involved in developing for future generations.

Curious to learn more? Get in touch with Jordan on our team today.