The closure of the Gatwick Hotel in St Kilda represents a new front in the ongoing gentrification debate in inner Melbourne. It highlights inconvenient truths about cultural appropriation, heritage as a driver of urban renewal, and the marginalisation of the city’s most vulnerable residents.

Gentrification taps into the fundamental urban planning and social issues facing Melbourne and other big Australian cities in coming decades. In particular, it has impacts on liveability, housing affordability, and social cohesion.

Gentrification has its benefits

Gentrification and the financial investment it represents can be a positive and transformative process for local communities. Better access to education and health services, as well as welcoming, attractive and vibrant streetscapes, are just some of the benefits of urban regeneration.

But, too often, the economic benefits of regeneration are separated from its social impact on existing residents. Rising property prices and rents are inevitable with gentrification. As a result, people on low incomes or who rely on social welfare are forced out as the wealthier middle class moves in.

The adaptive reuse or restoration of heritage buildings plays a key role in this process. Such developments can provide a sustainable and culturally sensitive solution to the challenge of increasing population density in our cities. Nonetheless, the debate on the role and value of heritage buildings is often paradoxical and divisive.

At its simplest, the divide is between those who passionately argue for preserving these buildings for their historical and cultural value, and those who see heritage as an unnecessary restriction on urban development.

Sometimes, the two sides align, as is largely the case with the Gatwick. Those in charge of the building’s redevelopment buy into the benefits of gentrification, with this development creating an opportunity to market luxury apartments at a substantial premium.

Trading on edginess and authenticity

The issues surrounding the Gatwick feed into a much more complex and potentially problematic debate about how we value our urban environment.

The threat to heritage is not destruction of the building itself. It’s the loss of a more intangible and hard-to-commodify aspect: the “collective memory” of stories, folklore and history. This forms the cultural fabric that contributes to the urban character and identity of an area.

The reality of life at the Gatwick was sometimes difficult. But, for decades, it provided a home for those most in need of shelter and safety. In the public consciousness, however, the Gatwick was a potent symbol of the inner city’s social problems: homelessness, drug addiction, prostitution and violent crime.

Local traders, residents and politicians all campaigned for its closure. Even the retail decline of Fitzroy Street was blamed on the hotel’s reputation.

It could be argued, though, that this very notoriety played a pivotal role in moving St Kilda along the path of gentrification. In recent decades, property developers have successfully marketed St Kilda as an edgy – but safe – place to live.

The area’s undeniable heritage, set against the backdrop of drugs, prostitution and a healthy dose of rock ’n’ roll folklore, knits together in an irresistible narrative that feeds the public appetite for “cultural authenticity”. In street after street, elegant but tarnished historic buildings have allowed investors to buy into this local mythology with relative ease.

Those who gave area its character lose out

The bitter irony is that this quest for authenticity has left long-term locals, such as the former Gatwick residents, vulnerable to the pitfalls of gentrification. The narrative, of which they formed an integral part, has moved on. New residents have co-opted the authenticity of St Kilda’s past while rejecting the challenging reality of how these social issues play out locally.

In effect, the very people who arguably contributed most to the local community’s cultural diversity and vibrancy are the first to be excluded. This pattern of appropriation, commodification and finally exclusion is replicated in historic suburbs across Melbourne and other cities.

The producers of Channel Nine’s The Block have bought the Gatwick. Under the TV spotlight, the gritty boarding house will undoubtedly be transformed into stylish and desirable apartments aimed at wealthy buyers.

But what does the future look like for its former residents? By ignoring the impact of urban regeneration on the homeless and vulnerable, are we acknowledging that closing the gap between our wealthiest and poorest residents is an impossible task?

Reducing urban regeneration to a system largely driven by the accumulation of personal wealth, with little or no thought for the profound social displacement that gentrification can bring, risks further marginalising those residents who already have little or no say in the future of our cities.