Gentrification

Updated on January 29, 2024
Article byPriya Choubey
Reviewed byDheeraj Vaidya, CFA, FRM

Gentrification Meaning

Gentrification is the rapid transformation of a neighborhood. In a particular locality, wealthy professionals and middle-class sections replace working-class residents. Gentrification has a significant impact on the housing market; buying or renting a house in a gentrified area becomes very expensive.

The word gentrification has been drawn from the English word ”gentry,” which denotes Britain’s upper class. Such spontaneous growth is often triggered by urban-renewal programs. Urbanization results in better infrastructure and standard of living.

Key Takeaways

  • Gentrification is a transition. Affluent outsiders rapidly displace the working-class residents of a neighborhood.
  • The term was introduced by Ruth Glass, a British sociologist. She coined the term to describe ‘1964 London.’ The middle-class hurriedly occupied these areas, displacing the area’s former residents.
  • Urbanization rapidly develops infrastructure and facilities, but the economically challenged residents struggle. There is a sudden increase in the cost of living—including the high price of property, goods, and services.

Gentrification Explained

Sometimes an investor buys a property in a rural area, 50 miles away from a city—they see tremendous growth potential in that area. Such investors are betting on the potential gentrification of that area. Thus, gentrification is a breakneck transformation from a poor or low-income group locality into a high-income area.

Gentrification

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Looking back, in 1964, Ruth Glass introduced the word ‘gentrification’—a modification of the word ‘gentry,’ which referred to the upper class in Britain. Ruth was a British sociologist.

She used this term to explain the visible alteration of London neighborhoods in the 1960s—middle-class outsiders displaced the working-class locals.

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Gentrification Examples

Let us look at an example to understand the effects of rapid urbanization.

Gentrification of Brick Lane Neighbourhood in East London

Brick lane is one of the prominent examples of gentrification ruining local businesses. Brick lane is a neighborhood located in East London. The place is popularly referred to as the ”Banglatown” due to historic businesses run by Bangladeshi and Bengali communities.

Banglatown now resembles multicultural London, but the various attempts to gentrify the region have left the Bangladeshi business owners unsure of future prospects.

Local business owners were alarmed when small hotels were converted into multi-million hotels. Further, a plan to build a five-story shopping center near the historic Truman Brewery was approved by the local committee.

But not all responses were cynical. The developer promised new job openings in the area, and some residents welcomed the change. Moreover, local businesses struggled to survive amidst the Covid-19 pandemic and gentrification attempts.

Jamal Khalique, a local who runs the oldest Bangladeshi supermarket in Brick Lane, believes that the government should take the initiative to support small local businesses—by providing incentives, concessions, and lowered rent. This raises a question—isn’t preserving the inherent character of Brick lane more important than converting it into another generic high street market?

Gentrification Causes

Localities are gentrified for the following reasons.

  1. High Traffic Congestion – When the population rises, residents find it hard to find houses in busy areas—former residents move to nearby remote areas.
  2. Urban-Renewal Programs – The government initiates infrastructural development projects in cities and neighborhoods. But such endeavors include the demolishing of old buildings and funding the construction of modern infrastructure—as their replacement.  
  3. Targeted Public-Sector Policies – The government introduces various policies to uplift backward areas. This includes public housing facilities, free food for the poor, and incentives for the affluent (for relocating into a backward region).
  4. The desire for Urban Lifestyle and Amenities – Distressed communities move out of their region and go to cities in search of jobs, better standards of living, and other comforts. City developers recognize such communities and invest in them. They develop the locality so that residents need not relocate to a bigger city.
  5. Housing Market Issues – When the houses in a city become expensive for the urban residents, they relocate to the neighborhood properties that are reasonable and close to the city.
  6. Increasing Job Opportunities –  In urban areas, the demand for cheap labor is always on the rise. Workers from nearby areas commute to the city—the area around the city gets gentrified.

Gentrification Pros and Cons

The advantages of rapid urbanization are as follows.

  • Diversity – Gentrification does not always replace existing communities. It rather allows the wealthier business class to reside in the same neighborhood. This adds diversity.
  • Economic Opportunities – The affluent bring new business ideas and opportunities—more job openings are generated for the residents.
  • Safety – Usually, high-net-worth individuals are more concerned about security; they take various measures to bring down crime rates.
  • Rise in Tax Revenue – When there is a lot of commercial development overall, tax revenue collected from the area increases.

Gentrification causes the following problems.

  • Low-Income Sections Suffer – Economic survival becomes a challenge for the traditional residents of the area (those who choose not to move out).
  • Displacement of Old Businesses – Most mom-and-pop businesses get replaced by shopping malls and chain stores.
  • High Cost of Living – The market is dominated by wealthier consumers, and the demand for high-value goods or services increases. But as a result, the cost of living rises for the poor as well.
  • A boom in Housing Prices – Buying and renting houses become unreasonably expensive for the traditional resident of the area.
  • Inequality – Existing communities are not entirely displaced from a neighborhood. As a result, income inequality between new residents and existing residents is created. Sometimes, the two sections clash.
  • Community Conflicts – Such urbanization attempts have a polarizing impact on the locality. There is a clear-cut demarcation between two groups—one favors gentrification, and the other vehemently opposes it.

Frequently Asked Questions (FAQs)

What is gentrification?

It is a rapid change; a city’s neighborhood is occupied by high-status new residents. As a result, the old working class or low-income section of the community is displaced.

Why is gentrification a problem?

Gentrification causes the following problems:
• As the cost-of-living rises, low-income residents struggle with income, employment, and education.
• Chain stores and shopping malls replace mom-and-pop stores.
• Purchasing or renting houses becomes exorbitantly expensive.
• Urbanization introduces income inequality into the locality.

Who benefits from gentrification?

Rapid urbanization does have its benefits:
• Affluent new residents add diversity to the region.
• Infrastructure improves.
• Residents get access to better amenities.
• The housing market flourishes.
• It leads to increased employment generation.
• Law and order conditions improve.

This article has been a guide to what is Gentrification & its meaning. We define gentrification, its problem, pros, cons, & its impact (good & bad) using examples. You can learn more about it from the following articles –

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