Public-driven attempts to provide decent housing to slum residents in developing countries have either failed or achieved minimal output when compared to the growing slum population. This has been attributed mainly to shortage of public funds. However, some urban areas in these countries exhibit vibrant real estate markets that may hold the potential to bear the costs of regenerating slums. This paper sheds light on an innovative hypothesis to achieve slum regeneration by harnessing the real estate market. The study seeks to answer the question “How can urban public policy facilitate slum regeneration, increase affordable housing, and enhance social inclusion in cities of developing countries?” The study approaches slum regeneration from an integrated land economics and spatial planning perspective and demonstrates that slum regeneration can successfully be managed by applying land value capture (LVC) and inclusionary housing (IH) instruments. The research methodology adopted is based on a hypothetical master plan and related housing policy and strategy, aimed at addressing housing needs in Kibera, the largest slum in Nairobi, Kenya. This simulated master plan is complemented with economic and residual land value analyses that demonstrate that by availing land to private developers for inclusionary housing development, it is possible to meet slum residents’ housing needs by including at least 27.9% affordable housing in new developments, entirely borne by the private sector. Findings suggest that under a robust public-led governance umbrella, market forces can (1) significantly contribute to fill the financial gap in order to achieve the end of slums by 2050 in coherence with the United Nations Agenda 2030 targets and principles, and (2) increase both affordable and market housing in upgraded neighbourhoods, hence enhancing social inclusion in cities of developing countries.

Inclusionary housing is considered a powerful local policy tool that can help address housing affordability and social inclusion issues. This paper draws from empirical research conducted in the City of Santa Monica in California to provide fresh insights on a successful innovative inclusionary housing program, the Affordable Housing Production Program (AHPP). This program was established to increase affordable housing production and enable social integration. Based on the Land Use and Circulation Element (LUCE) of the General Plan, the AHPP seeks to capture some of the increase in land value resulting from planned increases in the intensity of development. Our research shows that the program increased inclusionary housing production by market-rate developers by 15% over the previous inclusionary housing policy. The study finds that land use policies and planning can, through inclusionary housing, help harness the strength of the real estate market to (1) increase affordable housing production, and (2) achieve effective social integration in neighborhoods of opportunity.

Affordable housing remains a serious problem in many countries. Even as the housing affordability crisis deepens, most cities continue to exhibit robust real estate markets with high property prices. The low-income and poor households are unable to access affordable housing and remain excluded. This paper draws from empirical research conducted in the city of San Francisco and focuses on the application of Land Value Capture (LVC) through increased Inclusionary Housing (IH) requirements after plan changes that increased density potential in San Francisco’s Eastern Neighbourhoods to evaluate its effects on the goals of increasing both affordable housing and social inclusion. Findings reveal that the increased inclusionary requirements used as LVC mechanism enabled 76.2% of all the affordable housing units produced in the Eastern Neighbourhoods to be produced by market-rate developers in 2011–2015 as compared to the rest of San Francisco, where 35.5% of the affordable units were produced from the market through inclusionary policy during the same period. The study demonstrates that upzoning underutilised land coupled with a well-planned LVC mechanism can help harness the strength of the real estate market and increase both affordable housing production and social inclusion.