Cul-de-sacs of Transformation: The fate of central quarters after privatisation
The inner Erzsébetváros (Elizabethtown) in Budapest fell victim to the merchant spirit already upon its formation in the late 19th century. A rather dense urban structure was formed already then – with all lots covered from one end to the other – leaving very little public space. With the exception of Klauzál Square, there are no green areas or parks in the inner, densely populated quarters of Districts VI and VII. Although such spaces were, in fact, included in the urban planning, the city sold them to investors, and they have been built over. These strongly profit-oriented developments of the late 19th century are usually referred to as the first large-scale real estate speculations. The unprecedented growth at the time provided a fertile ground for these in all respects.
It was after the joining of previously separate districts in 1873 that Budapest became a capital – lacking the necessary basic institutions and public facilities, as most of these had been operating in Vienna and Bratislava. Parliament, public administration, universities, schools, hospitals – all of these had to be built from scratch, as well as the residential buildings that would accommodate the masses working to build a metropolitan capital from the medium-size city of a population of 100,000. It was a self-generating process, as it coincided with the dawn of industrialisation in Hungary. Industrial development, and the concentration of labour force it required, had made the building of new neighbourhoods necessary, which itself provided hundreds of thousands with work for decades to come.
Most of the buildings erected in this period are still standing, except for those that have fallen victim to World War II and recent real estate speculations. Of course, they have been run down by sixty years of negligence and an almost complete lack of maintenance, but they will still stand for longer than the architectural products of the past 20-30 years. This is mainly due to the favourable conditions at the time of their construction: the high quality of materials, the professional expertise, and the handicraft traditions. These buildings were state of the art in their age, and were designed with considerable reserves structurally and statically. Their load-bearing walls were made from high-quality fired bricks – true, initially mixed with carved limestone, which has less load-bearing capacity. If these structures have not been weakened by later in-expert reconstructions and renovations, they can serve as a good basis for a – perhaps even city-wide – real estate development project.
The residential houses comprising more than 100,000 flats in Budapest have essential social significance, as well: they were designed by an architectural programme that allowed the mingling of different social groups. The street front housed large flats with a street view, inhabited by wealthy or bourgeois families. The small flats in the side and back tracts lacked facilities and opened onto the courtyard. This is where the less wealthy, the poor, and the workers lived. Ground-floor shops along the main routes – such as Király Street – were occupied by merchants; the ones in the courtyards by artisans. Certain blocks housed bigger manufactories where industrial production took place. The tenement model comprised a diverse palette of interdependent social strata, groups and professions, encompassing entire quarters.
All this changed with one stroke when all private property was nationalised in 1952. This not only meant the disappearance of the bourgeoisie: wealthy families were deported, their valuables seized, their flats divided into smaller ones to satisfy the renewed housing demand. The post-war political elite discontinued the previous regime’s practice of investing capital into erecting new houses and entire quarters for the labour force swarming to Budapest from the provinces as a result of centralisation. They solved the problem with their own – simple and fast – means, breaking up most of the existing flats. At the same time, merchant streets, shops, boutiques and manufactories disappeared. It took decades for the city to recover and to rediscover its urban scene and spaces, but by that time, the construction of housing projects had started, as yet another contribution to de-urbanisation.
The regime’s pool of devices was not exhausted by eliminating the fundament of downtown life – the bourgeoisie. Since the nationalised houses had started to wear down for want of maintenance, the political leadership resettled already poor Romany families into parts of the city centre thus left to erode – Districts VI, VII, VIII and IX. This decision is a perfect example of the ruling power’s cynicism: neither the Romany, nor the deteriorating buildings benefited from the resettlement. The task of preserving the physical condition of the central districts remained unaccomplished.
As of the 1990s, everything was reassessed once more amidst the sudden emergence of the market. Previously national properties were passed on to the local governments, each of which could decide freely on their fate. The majority of real estate was sold by the districts to their residents. In view of the comparative statistical analysis, it appears as though the Hungarian families had all at once turned wealthy overnight: the private property per capita is now a lot higher than in most other European countries. In fact, the assets were simply reorganised: the country did not gain wealth.
The fact that the tenants had become owners did little to improve the physical condition of the flats, and so the quality of life remained practically the same. Although the privatisation of flats comprised hundreds of thousands of transactions and produced income for the local governments, these authorities failed to use these returns to create new funds or reinvest them into the real estate to increase their value and raise the standards of the districts. Tenant-turned-owners acquired their freehold flats at a bargain price, often as little as 10% of the market value – although there was no stable real estate market at this time, so the prices were hypothetical. In this manner, almost anyone could turn into a flat owner without having to comply with the financial requirements of being one.
Real estate is an asset, and practically the most valuable one at that. As any asset, it needs to be managed, and requires knowledge of the obligations and expenses this entails. Asset management is a professional field that requires circumspection, know-how, and even risk assessment. Real estate is at once a capital and an investment, with a corresponding yield.
The majority of real-estate owners in Hungary lack the knowledge that the appropriate management of their property would require. The right of the current stock of flats – especially old residential houses – to exist is constantly questioned because no one is willing to do their maintenance. The majority of inhabitants have become owners by a one-time effort, but their lifestyle as owners is existentially unsustainable. The money once invested into the flat remains dead capital, whose capacity of producing income remains dormant for want of allocating resources to maintenance, renovation and development. This capital is simply worn down by the inhabitants, while renting a flat would perhaps provide a better quality of life for them.
Today it seems that the privatisation of the local government’s stock of flats has not solved anything: 10-15 years after the transactions, there is still no considerable improvement in the liveability of these districts. The best example is the inner Erzsébetváros – the old Jewish Quarter of Pest – which is still characterised by run-down buildings and the lack of public spaces. Among the sagging buildings, however, private capital has popped its head out, erecting “characteristically characterless” buildings to replace the demolished old residential houses.
Today, urban planning for the area allows practically everything necessary for making a quick profit, which is exhaustively exploited by the investors. The magic phrases – or numbers – are lot coverage limitation and floor-area ratio, which, in the case of these districts, allow a coverage that is even denser than the already extremely close-knit texture of the city. With the continued reduction of flat sizes, there are even more residents per lot, resulting in a deteriorating quality of life. This new investor’s behaviour, assisted by the local governments, further degrades the liveability of the area, even if the street fronts are no longer run down. The quality and architectural appearance of the newly erected buildings – with a few exceptions – is completely sleazy and disgraceful.
The question emerges: what, then, is urban planning good for? Theoretically it serves to design medium- and long-term interventions in service of a future objective, and to control the profit-oriented operations of investors, all in favour of the public and future liveability. Obviously, the investor – who, by the way, pockets a multiple of the profit that is realisable by fair means on the Western European market, and with much less risk and meagre performance – will not give a lot of thought to architectural quality. The economic crisis has only slowed this process down temporarily: investors, as well as banks, are ready to jump, waiting for the critical period to wear out so that they can resume real estate “development”, because this is the most profitable business in the region.
Despite their run-down condition, the buildings in Budapest are suitable for designing up-to-date living spaces: in addition to their static features mentioned above, their spaces also vouch for this. The existing real-estate assets cannot be efficiently and sustainably made use of without the active participation of local governments. Of course, there have been attempts at rehabilitation before, as well as after the political transformation. However, the rehabilitation of entire blocks, which began in the 1980s in the inner Erzsébetváros, proved to be unsuccessful: not only was the construction industry incapable of producing high quality, but its fundamental concepts were also dubious – the zones of these buildings that were designated as public space have been vacant for decades.
State-of-the-art renovation of old buildings would not be unproblematic, but it is feasible, even if with more modest return rates than today’s investment practice. It is also possible to modify and modernise these spaces: within a block it is possible to open several courtyards together, make passageways, and design diverse spaces and programme facilities, with high quality contemporary interventions. The development of public spaces and green areas – combined with a cutback in traffic – is also an integral part of renewing the central districts. Naturally, this can only be realised as part of a rehabilitation practice in which buildings are designed in accordance with public spaces, public functions and services.
