Abstract
The paper addresses the links between planning uncertainty and land values, from theoretical and empirical perspective. We investigated land prices in a western part of Krakow (Poland) using a sample of 419 property sales from 2002 to 2014. We used spatial hedonic models to explore the relations between planning and building decisions, development density and land values.We found that administrative decisions (development and building permits) are capitalized in sales prices. Land with valid Decision on Development Conditions sold for 27-29% more than comparable properties. The implicit value of Building Permit was even higher as it increased the sale price by 47-50%. Additionally, we observed that potential density of development has a positive impact on land prices, but the effect is stronger for institutional investors.
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