Abstract
State intervention in land supply can be a powerful tool in shaping real estate investment. Yet, few studies have examined the effect of central state intervention on land supply at the municipal level and the impact of land supply on real estate investment with respect to different tiers of prefecture-level cities in China. Varying central–local dynamics of land supply in different tiers of cities, and the often taken-for-granted relationship between land supply and real estate investment, warrant further investigation. This study aims to fill these gaps. It is found that the multi-purposed central land policy and the varying land leasing strategies adopted by different tiers of cities contribute to the varying land supply trajectories, calling for more nuanced and better-tailored central land policies that focus on the socioeconomic conditions of cities. The general significant and positive correlation between land supply and real estate investment, revealed by a panel regression analysis incorporating 280 prefecture-level Chinese cities, suggests that land supply control can function as a critical tool in governing real estate investment in China, which also sheds light on the governance and promotion of sustainable real estate markets in other parts of the world. This study also reveals a higher possibility of land speculation in first- and second-tier cities than that of low-tier cities. The nuanced correlations between land supply and real estate investment and the varying land development strategies employed in different tiers of Chinese cities imply that the effectiveness of land supply intervention in shaping healthy real estate investment may depend on local contingencies, calling for meticulous and tailored governance on land supply and real estate investment behaviors.
Highlights
Holding a critical position in the economy, the real estate sector is regarded as a pillar industry in China
The results show that both the same-year and one-year lagged land supply have a positive and statistically significant impact on real estate investment in all cases, except for the same-year land supply in first- and second-tier cities
The coefficient for the same-year land supply generally increases from second-tier cities to fifth-tier cities, meaning that the possibility of land hoarding decreases with city size
Summary
Holding a critical position in the economy, the real estate sector is regarded as a pillar industry in China. The study of the impact of land supply on real estate investment in different tiers of cities can shed critical light on this issue. This study explores the impact of central state intervention on land supply at the local level and its influence on real estate investment in prefecture-level cities in China. This study investigates the relationship between overall real estate investment and the total amount of land supply, at the expense of the subtleties of different land types (e.g., residential, commercial, industrial; see references [20,21]) and land leasing means (e.g., negotiation, listing, auction, tender; see references [22]). It is followed by empirical analysis that examines the central state’s land supply interventions, land supply outcomes and their impact on real estate investment in different tiers of prefecture-level Chinese cities. The final section summarizes the findings, makes policy recommendations, highlights the limitations of this study, and reflects theoretically on state intervention, land supply, and real estate investment
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