Value of land properties in the context of planning conditions risk on the example of the suburban zone of a Polish city

Abstract

The complicated legal status of land properties in Poland connected with some of them lacking clearly defined development conditions leads to investors taking risks when purchasing land for investments, who often hope to pay a lower than average market price for such a real estate. The aim of the article is an attempt to assess planning conditions risk taken by investors by the analysis of transaction prices of land properties. In this context, the research question of whether the lack of clearly defined development conditions for land carries over onto lower prices of land plots purchased by investors was posed. This is a reference to studies carried out in the years 2008–2015. Conducted in the article will be a comparative analysis of land property prices from areas characterized by with varying planning conditions. The analyses make use of causal models with a single dependent variable – accounting for differences in (un)defined development conditions. The carried out analysis for areas of two communes from the suburban zone of the city of Bydgoszcz showed that the buyers of real estate perceive a difference in the planning conditions of the purchased building plots. Those which have clearly defined development conditions are attributed with higher values. Land without defined development conditions, in Poland under only a study of conditions and directions of spatial development, are attributed with lower values. Recognizing the above relationships is necessary when taking investment decisions and making proper assumptions in the land property valuation procedure.