Urban regeneration and the strategic role of the new housing model


Urban regeneration is an opportunity to reimagine the future of urban lifestyle, using alternatives to the traditional "build-to-sell" model. According to the Build to Rent 4 Sustainable Real Estate study, which was promoted by Lendlease, an international real estate and investment group, and carried out by SDA Bocconi, build to rent responds to new emerging housing needs while generating significant social, environmental and economic impact for the community. Unlike in other countries, the model does not fit into a specific regulation in Italy, but if implemented correctly, it could open up important development opportunities, creating a true investment category with significant benefits for Italian economic performance.

Presented by SDA Bocconi and Lendlease, the research was introduced by Stefano Caselli, Dean of SDA Bocconi; Paola Cillo, Associate Dean of the Research Division of SDA Bocconi;  Francesco Billari, Dean of Bocconi University; and Andrea Ruckstuhl, CEO Europe of Lendlease. The study was conducted by a SDA Bocconi team under scientific directors Andrea Beltratti, who has a PhD from Yale and serves as Full Professor of Finance at Bocconi University, and Alessia Bezzecchi, Associate Professor of Practice in Corporate Finance & Real Estate at SDA Bocconi.



The context analysis: the pivotal role of the housing issue

The issue of housing is key. In recent years, inadequacies have emerged in the existing housing supply, which is often technologically outdated, energy intensive and functionally inadequate. Homeownership is no longer perceived as a safe-haven asset due to both the emergence of a new mobility in the labor market and the limited savings/spending power of the middle class and young people. These elements make renting a viable solution for the needs of the new housing demand.


A possible answer: build to rent

The defining characteristic of build to rent is the creation of properties for rent that are professionally managed, with the highest quality standards of interior space and architecture, energy efficiency and environmental impact. The cornerstone of the proposed model, unlike build-to-sell, is the presence of a professional operator specializing in the management of real estate for residential use who, with appropriate certificates and standards and a time frame of at least 30 years, provides services related to the person, the building, and the community (e.g., from building maintenance and services to home cleaning and baby-sitting, as well as a gym, school services and co-working spaces), proposing a model of housing as a service.


It is a home that provides a good quality of housing in which the focus is the needs of the end user, with the aim of providing tenants with a quality experience not only in terms of housing, but also in terms of economic ability and management, a home that can respond to changing needs for space and flexibility as they shift over the years.


The new asset class will be tested for the first time in Lendlease's two urban regeneration projects in Milan: Milano Santa Giulia and MIND - Milano Innovation District.  These are ecosystems that can provide new answers in terms of building quality, energy performance and the types of services offered. Lendlease translates its international experience in the development and management of build-to-rent spaces, like in Elephant Park in London and Clippership Wharf in Boston, to the Italian market.


"The research project," explain scientific directors Andrea Beltratti and Alessia Bezzecchi, "aims to analyze and calculate the impacts of introducing a new residential model in the real estate market. From our survey, build to rent as a response to new housing needs is as a solution that can respond inclusively to the emerging demand from different types of users while creating positive externalities in the territorial sphere, and is sustainable from an economic and social point of view due to enabling factors like technology and innovation. The model offers important economic, social and environmental benefits for direct users but also for local communities through the positive externalities generated.


"Unlike other international markets," says Andrea Rucksthul, "build to rent in Italy has not yet found its place in the administrative and fiscal framework, yet it represents a potential option for the development of housing policies, alongside affordable housing, social housing, and student housing, with significant economic and social and environmental implications. Based on our international experience, the intuition that build to rent in Italy can generate value for the country system by responding to new demand needs in an inclusive and sustainable way has been substantially confirmed in this research. The result of the SDA Bocconi study has in fact amply demonstrated that the new model of housing as a service produces significant advantages in terms of economic, social and environmental benefits by responding to the needs of new housing demand with specific requirements in the medium and long term. For innovation to become a standard, it needs a new regulatory frameworks."


The Build to Rent 4 Sustainable Real Estate study

Lendlease, building on its international experience in the sector, commissioned the study from SDA Bocconi to outline the social,  environmental and economic impacts and the regulatory and cultural context the new residential supply model fits into in Italy, to identify its potential and benefits and to verify its advantages for the country system.


The analysis and quantification of direct, indirect and induced social, economic and environmental value generation is the subject of the Lendlease and SDA Bocconi study, and it assumes an operating period with the same use of 30 years for a minimum of 50 apartments using the two urban regeneration projects led by Lendlease as case studies.


The study analyzes how two major urban regeneration projects can respond to the city's emerging and urgent housing needs with innovative and sustainable solutions that can generate social and economic impacts by proposing a model of housing as a service, in other words a set of services for people, the building, and the community.


The research project analyzed the two case studies by looking at the phases of development, income generation and transfer in two scenarios: the current one in which administrative, tax, and zoning regulations are partially adapted to the build-to-rent model and one with a regulatory set-up inspired by international best practices.


Social, environmental and economic benefits

The new build-to-rent housing model is long-term and has value-added services. It produces relevant results in terms of economic, social and environmental value creation. The build-to-rent model can also contribute to the achievement of sustainable development goals promoted by the 2030 Agenda in addition to supporting the economy through tracked economic flows by providing quality service through an ecologically, socially and economically sustainable solution.


The environmental benefits are not only related to energy efficiency and construction quality, but also to the possibility of implementing urban regeneration projects that balance living and professional spaces in a new and harmonious way. According to the research, 22 percent of the positive externalities are due to energy efficiency, sustainable mobility, and the reduction of pollution.


Economically, public budgets benefit from new tax revenues associated with the higher level of production, employment, community creation and increased flows tracked due to the presence of the professional operator and are quantifiable at about 260 euros per year per resident.


In summary, build to rent generates numerous positive externalities that benefit all those who live and work in the areas in which it is developed, including urban regeneration and for the entire country system, encompassing the new model of housing with a positive impact on local communities and the city as a whole, as well as in terms of public finance.


SDA Bocconi School of Management



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