I see. But that also mean the original investors - the ones that put the initial money - are getting sub par returns. Or government land subsidies play an important role here assuming that private developers have no access to it.
I don't see the lower returns as particularly damaging - there has been too much speculation in real state in recent decades. But that might not be the case once (if) returns get lower.
If the original investors are also living there (or bought in), then the cheaper housing costs make up for the lower returns, or no returns at all. The cheap housing is the return.
Now technically you could argue that the outcome would be the same if you lived more expensively and you were an investor in some other for-profit housing with high returns. But that’s usually not the case, as the cash amounts you’d need initially are too high for most people.
Answering both of you guys: Being an original investor of a co-op usually meant you were really struggling with the alternatives. That is a return itself.
There are also private housing stock examples for that behaviour: gentrification theory sees the so-called "pioneers" who move into low-quality neighbourhoods. They are doing much of the work improving quality-of-live/attractiveness that later on others will reap the benefits from like real-estate developers and long-time landlords.
Yes, land subsidies are a key engine. I'm aware of the moral problems that creates. But if I assume that within democracies a tendency persists to have some sort of social welfare, then I think it is more constructive to engage in how to organize this redistribution. Supporting co-ops seems like a very lean and non-harmful way (compared to government housing or state ordered quotas on free enterprises).
I don't see the lower returns as particularly damaging - there has been too much speculation in real state in recent decades. But that might not be the case once (if) returns get lower.