Global real estate networks and the securitization of townships: digital technologies and the global assembling of mortgage-backed securities in post-apartheid South Africa

Keywords: securitization, data, mortgage, segregation, apartheid, South Africa, credit scoring
Abstract Type: Paper Abstract

Abstract

This paper introduces the concept of “global real estate networks” to analyze the making of residential mortgage backed-securities, and the resulting securitization of townships in post-apartheid South Africa, reversing decades of redlining, yet renewing exclusionary lending practices. Using computational analyses and expert interviews, this paper argues that the datafication of home-seekers and properties through the use of digital technologies, and the circulation of real estate and consumer data through global financial networks participate to the global integration of unequal housing markets. Through the digitization of title deeds and the selection of mortgage applicants by credit scoring, lenders extended securitization beyond the white middle class, relying on automated property valuations, standardized investors reporting, and risk-based mortgage pricing. To unpack the footprint of securitization at the neighborhood level, I sourced 2.5 millions of title deeds and created a database of 850,000 housing transactions covering the Cape Town metropolitan area from 1984 to 2016. Combining computational analysis with expert interviews, I map the dynamics of credit across the racialized housing market, and highlight how mortgage lenders have entered the Black & Coloured townships by adopting a cherry picking, data-driven, “bit by bit” strategy to assemble their mortgage-backed securities. By historicizing these market structures within the colonial and apartheid’s techniques of classification of property and people, this paper underlines how securitization in South Africa points out to the making of global real estate networks structured around digital technologies and real estate data.