Industrial Land Market Research Articles

Land allocation and industrial agglomeration: Evidence from the 2007 reform in China

This paper highlights the crucial role of land allocation mechanisms in fostering industrial agglomeration by examining China's 2007 industrial land market reform. By introducing transparency into the land-selling process, the reform facilitated more buyers to compete for land (as evidenced by increased land sale prices), enabling local governments to allocate land to the most suitable users. Utilizing comprehensive data sets that include information on initial local industrial structure, new industrial establishments, and industrial land transactions, the empirical analysis finds that the reform significantly increased the entry of firms from industries aligned with local specialization, particularly in regions that implemented the reform more strictly. Industries characterized by substantial unrealized agglomeration economies or highly localized spillover effects experienced amplified effects. A well-functioning capital market further enhanced the land market reform's impact. Supporting evidence demonstrates the reform's positive effect on economic growth (as evidenced by changes in nighttime luminosity), potentially through increasing local firms' TFP.

Politics and entry deterrence: Evidence from China's industrial land market

AbstractThis paper examines one million land transactions and firm census data sets to determine the effect of market concentration on entry deterrence in China from 2006 to 2013. We find that a one standard deviation increase in the Herfindahl–Hirschman Index leads to a one standard deviation decrease in local government‐designated industrial land sales to nonlocal firms and to a 2.9 standard deviation increase in land cost. Further evidence suggests that firms with high market power lobby their local governments to deter the entry of nonlocal firms.

Spatial correlation and influencing factors of the urban land transaction market in the Yangtze River Delta urban agglomeration

PurposeLand transactions are a key indicator of urban sustainable development and urban space expansion. Therefore, this paper aims to study the spatial correlation of different types of land transactions.Design/methodology/approachBased on the big data of land micro transactions in Yangtze River Delta urban agglomeration, this paper uses the generalized forecast error variance decomposition (GFEVD) method to measure the correlation level of urban land markets. Also, social network analysis (SNA) is used to describe spatial correlation network characteristics of an urban agglomeration land market. In the meantime, the factors that influence the spatial correlation of urban land markets are investigated through a quadratic assignment procedure (QAP).FindingsThe price growth rate of urban residential land was higher than that of industrial land and commercial land. The spatial relevance of urban residential land is the highest, while the spatial relevance of the urban commercial land market is the lowest. The urban industrial land market, commercial land market and residential land market all present a typical network structure. Population distance (POD) and Engel coefficient distance (EGD) are negatively correlated with the correlation degree of the urban residential land network; traffic distance (TRD) and economic distance (ECD) are negatively correlated with the correlation degree of the urban industrial land network and commercial land network.Originality/valueThis paper uses a systematically-integrated series of problem-solving models to better explain the development path of urban land markets and to realize the integration of the interdisciplinary methods of geography, statistics and big data analysis.

LAND MARKETIZATION, SECONDARY LAND MARKET, AND EFFECTS ON INDUSTRIAL LAND PRICE

Land marketization and its effects are widely documented across developing countries. Few studies, however, have investigated the link between industrial land price determination and industrial land market reform, based on the establishment of a pilot open trading platform for the secondary market. Moreover, no studies have specifically examined the link between primary and secondary industrial land markets. This study, therefore, investigates industrial land price determination using a quasi-natural experiment to interpret distortions in industrial land prices in China. Using industrial land sales data for 2006–2017 in the city of Haining, Zhejiang Province, China, this study compares industrial land value in the secondary market with land transfer prices in the primary market and identify undervaluation in the primary market. The results show that the growth rate of industrial land transfer prices increased every year after the open trading platform was established. Moreover, compared with nonpilot districts and counties, industrial land prices in the pilot city (Haining) increased by 11.14% from 2015 to 2017. The findings suggest that, based on the pilot program, further market reforms should be undertaken by establishing open trading platforms in a broader area.

How do industrial land price and environmental regulations affect spatiotemporal variations of pollution-intensive industries? Regional analysis in China

The spatial agglomeration of pollution-intensive industries (PIIs) leads to an increase in environmental risks. Land price and environmental compliance costs are important elements of the production costs of PIIs, which may affect the location selection of PIIs and further affect industrial distribution. However, there is a lack of research into the impacts of the incompletely competitive industrial land market on the distribution of PIIs. Moreover, the impacts of environmental regulations on PIIs are also controversial. This study characterizes spatiotemporal variations of PIIs at a city level in China from 2007 to 2016 with the newly-expanded industrial land use data and establishes a geographically weighted regression model to estimate the impacts of industrial land price and environmental regulations on the distribution of PIIs. The results are as follows: 1) PIIs tend to be relocated to the less developed area of western China. Due to the relatively lower land and labor costs in western China, land use by PIIs in this area as a proportion of the national total gradually increases, and new high-density areas of PIIs are formed in the northwest region of China. 2) PIIs are sensitive to land cost and tend to locate where the industrial land price is low, and with the marketization level of industrial land being higher, the negative impacts of industrial land price on PIIs become stronger. 3) The regression results for environmental regulations do not support the pollution haven hypothesis. Regional differences in the production costs caused by the improvements in environmental regulation intensity are not sufficiently large to form a pollution haven. This study uses newly-expanded industrial land use data to characterize the distribution of PIIs, which can directly reflect the location selection of PIIs. Moreover, the inter-city analysis can contribute to a deeper understanding of the relocation of PIIs in China at finer geographical scales. According to the results obtained, a reasonable industrial guidance mechanism need to be established to promote environmental equity, and land markets need to be further perfected to optimize the industrial layout.

Does the Land Price Subsidy Still Exist against the Background of Market Reform of Industrial Land?

In 2007, China started the market reform of industrial land, with the aim of establishing a more effective industrial land market and promoting the effective allocation of land. For this study, we want to explore what strategic choices local governments and enterprises will make under the background of market-oriented reform, and whether there are still some implicit land price subsidies. In this context, based on matching micro land transfer data (2007–2013), we examined the policy effect in the seven years since the reform. Then, we further analyzed the land transfer strategies of local governments and the differences they made to enterprises’ land purchasing decisions against the background of the reform. The following were found: ① With the deepening of market reform, the effect has gradually become clear. The proportion of industrial land transferred through market modes increases year by year. Furthermore, due to marketization, the price of industrial land has increased significantly, and land purchases among enterprises have become more competitive. ② Against the background of the reform, local governments tend to adopt listing as an alternative to negotiation, so as to attract investment from preferred enterprises. ③ Local governments tend to give state-owned and large or medium enterprises more subsidies by way of listing, which reduces the land purchase price for these enterprises. Based on the results, the market-oriented reform of land should be adhered to, and the selection mechanism of tender, auction, and listing transfer methods should be further standardized and refined. Besides, a variety of ways to meet the needs of enterprises for land use (such as lease first and then transfer) should be proposed to compensate for the existing insufficiency.

HOW DO LAND USE REGULATIONS INFLUENCE INDUSTRIAL LAND PRICES? EVIDENCE FROM CHINA

Due to low industrial land prices and inefficiently used industrial land, China’s central government has reformed land regulations in order to promote more market-oriented industrial land. Considering the differences in land management between developed and developing countries, this study aims to investigate the impact of land use regulations on industrial land prices in China and the effect of market-oriented reforms of industrial land policy. Measures that capture multiple dimensions of land use regulation tools are incorporated into OLS models based on a micro dataset from 1999 to 2016 that covers Jiaxing City in Eastern China. The results show that (1) The land policy implemented in 2006 to promote industrial land marketization has had a very limited effect; (2) The impact of land supply on industrial land prices was decreased for land transferred through listings after 2006, which implies an immature marketization; (3) Zoning instruments has obvious effects on industrial land prices; (4) The results imply that the effect of land use regulations varies with firm ownership and development zones. The findings in this paper clearly show that the industrial land market should be more open and competitive and combined with a rational land supply to promote the market-oriented price mechanism.

A Great New World? China’s Industrial Land Market Post-2007

Market forces played a negligible role in the allocation of industrial land before 2007 in China. Since 2007, the central government has launched a reform that strictly implemented two policies: 1) all the urban industrial land must be sold through public auction; 2) there is a minimum land price (MLP) constraint on industrial land transaction. This paper investigates the micro-foundations of the industrial land market in urban China post-2007. In this market, the local government as monopoly supplier auctions off industrial land in order to gather land sales revenues and boost local industrial development, subject to an MLP regulation from the central government. Using a large land-transaction data matched with county-industry-specific characteristics, our empirical analysis finds that: first, the industrial land markets have been fledging in China, fostered by the reform since 2007. Specifically, in contrast to before the reform, the industrial land sale prices become pretty responsive to both the demand factors (e.g., industry agglomeration and coagglomeration, local economic development) and the supply factors (land cost) of the market; moreover, in terms of quantity, more land is sold to industries with higher degree of specialization or concentration in a county, suggesting improved allocation efficiency. Second, local governments selectively support industries in their land supply decisions. We find that local governments tend to sell more land at lower prices to those industries that are strategically important (classified as priority industries) or that can bring higher coagglomeration externalities to a county. Third, although about 70% of land transactions in our sample are not bounded by the central government’s minimum price constraints, still the MLP constraints are binding in 55,000 land transactions amounting to a total land area of 2,824 square kilometers, and costly downward adjustments are involved there. Our analysis reveals different preferences between local governments and the central government. Compared with local governments, the central government tends to value less the coagglomeration externality in developed regions. Also the central government tends to be more concerned about the social cost of land supply than local governments in general.

Do land price variation and environmental regulation improve chemical industrial agglomeration? A regional analysis in China

China’s governments have a strong control over resources, such as land resources, and determine environmental policies for the nation. As an essential part of the production cost of chemical enterprises, land price and pollution costs play a critical role in location selection. However, whether the current incompletely competitive industrial land market and improving environmental regulations in China would affect chemical industrial agglomeration (CIA) is unclear. This study incorporates the land price variations, environmental regulation, and CIA into one research framework. Calculation methods of industrial land price variation (LPV), environmental regulation (ERI), and CIA are established, to reveal their development level. Furthermore, a geographically and temporally weighted regression (GTWR) model is established to estimate the spatial and temporal impacts of land price variation and environmental regulation on CIA by using a panel data from 2007 to 2015. The results show significant spatial differences in the impacts of land price variation and environmental regulation on CIA between cities. The majority of the impacts of land price variation and environmental regulation on CIA are negative. However, the temporal change in the impacts are not as significant as the spatial change. Other control variables, namely, free trade, natural resources, and highway density, have a positive impact on CIA.

Can price regulation increase land-use intensity? Evidence from China's industrial land market

A major part of the literature on land use regulations focuses on the residential land market. In this paper, we examine the impact of the minimum price policy on the large, but understudied, industrial land market in China. The minimum price policy aims to reduce wasteful land use in the industrial market that results from low transaction prices; it varies across counties or districts. We show that this policy increases the overall land-use intensity in the industrial market: for each additional 100 yuan increase in imposed minimum prices, the unit transaction prices range from 31.4 to 59.7 yuan higher, and the output and total factor productivity of new entrants range from 11.8% to 16.1% higher, respectively. Furthermore, we provide suggestive evidence that higher minimum prices reduce the likelihood of land lying unused post transactions, which has the effect of increasing the industrial output per unit of land.

Can Price Regulation Increase Land-Use Intensity? Evidence from China’s Industrial Land Market

A major part of the literature on land use regulations focuses on the residential land market. In this paper, we examine the impact of the minimum price policy on the large, but understudied, industrial land market in China. The minimum price policy aims to reduce wasteful land use in the industrial market that results from low transaction prices; it varies across counties or districts. We show that this policy increases the overall land-use intensity in the industrial market: for each additional 100 yuan increase in imposed minimum prices, the unit transaction prices range from 31.4 to 59.7 yuan higher, and the output and total factor productivity of new entrants range from 11.8% to 16.1% higher, respectively. Furthermore, we provide suggestive evidence that higher minimum prices reduce the likelihood of land lying unused post transactions, which has the effect of increasing the industrial output per unit of land.

Examining lag effects between industrial land development and regional economic changes: The Netherlands experience

In most empirical applications, forecasting models for the analysis of industrial land focus on the relationship between current values of economic parameters and industrial land use. This paper aims to test this assumption by focusing on the dynamic relationship between current and lagged values of the ‘economic fundamentals’ and industrial land development. Not much effort has yet been attributed to develop land forecasting models to predict the demand for industrial land except those applying static regressions or other statistical measures. In this research, we estimated a dynamic panel data model across 40 regions from 2000 to 2008 for the Netherlands to uncover the relationship between current and lagged values of economic parameters and industrial land development. Land-use regulations such as land zoning policies, and other land-use restrictions like natural protection areas, geographical limitations in the form of water bodies or sludge areas are expected to affect supply of land, which will in turn be reflected in industrial land market outcomes. Our results suggest that gross domestic product (GDP), industrial employment, gross value added (GVA), property price, and other parameters representing demand and supply conditions in the industrial market explain industrial land developments with high significance levels. It is also shown that contrary to the current values, lagged values of the economic parameters have more sound relationships with the industrial developments in the Netherlands. The findings suggest use of lags between selected economic parameters and industrial land use in land forecasting applications.

Industrial land price between China’s Pearl River Delta and Southeast Asian regions: Competition or Coopetition?

The planned economy system’s previous form of industrial land market control in China has led to current market failure because of a large amount of industrial land being sold at a very low price, causing extensive overuse of land and negative effects on land management. As the “World Factory”, the Pearl River Delta (PRD) is well known for its rapid urbanization largely driven by Foreign Direct Investment in labor-intensive industries. A low-land price strategy has been commonly adopted by the local government in order to attract industrial investment. In the past decade, the PRD has increasingly faced the increasing competition from its neighboring competition from its neighboring countries in Southeast Asia that have established preference policies to attract FDI and foreign enterprises. Despite a growing body of literature on the internal forces of industrial land in China, little is known of the external forces involved except for the importance of FDI and the intensity of interregional competition between China and other countries in attempting to attract foreign investment. This research fills the knowledge gap by modeling the situation in the form of an international cooperative game model aimed at revealing the industrial land price formation mechanism between the PRD region and Southeast Asian regions. The conditions of industrial land in the area and several Southeast Asian countries are first analyzed for their industrial land price movements in recent years. A game theoretic model is then built that exhibits similar characteristics. The result indicates that the governments’ low land price strategy and the competition between the PRD and its neighboring countries have created unnecessarily high social and environmental costs. Policy suggestions are made to encourage a more appropriate use of industrial land in China, and the most important being the need for a mindset shift from competition towards coopetition between the PRD and Southeast Asian regions.

The Impact of Contamination on the Industrial Land Market

This study examines the impact of contamination on land prices and sales in an industrial district in Baltimore, Maryland. We tracked the sales and selling price of land, known to be contaminated, known to be clean, and suspected of contamination because of its historical uses in one industrial area of about 5,580 acres in southwest Baltimore. The results indicate that after the mid-1990s, contaminated parcels have been selling, and the market has adjusted to contamination by lowering prices. Using an OLS model of land prices, we find parcels adjacent to a contaminated parcel - either known or suspected - sold at a 35% discount, and parcels known to be contaminated or had an historical reason-to-suspect of contamination sold at a 55% discount.

Identifying Industrial Location and Site Preferences for Small Business: A South Australian Case Study

This paper is based on a survey of 87 small to medium industrial land users which was undertaken in June 1997 to examine industrial property use and preferences within the Adelaide Statistical Division (ASD) of South Australia (SA). Adelaide, the state capital of South Australia has a metropolitan population of 1 million. The study was undertaken in response to a perceived mismatch by small business operators within the industrial land market between demand for and supply of industrial zoned land in Adelaide in terms of location, quality and site characteristics. The survey was undertaken across a cross section of small business land users in terms of location, tenancy and business type at a time when significant areas of industrial land within metropolitan Adelaide were being rezoned for residential and recreational purposes. Small business continues to be a major contributor to the SA economy but may be impeded in its development by uninformed planning decisions. This paper provides a focus on current characteristics and preferences of industrial property users in an attempt to better anticipate future demand for industrial space. The implications of the survey for decision making with respect to management of land and planning policy are explored

The impact of industrial land use policy on industrial change

Change in the manufacturing structure is gaining momentum in many developed as well as developing countries because of the globalisation. As an advanced developing city-state, Singapore has been having the same experience. This paper explores the role of the industrial land market in the changing process of Singapore's manufacturing. In the background of land scarcity and rapid growth, it is found that changing price movements in the industrial property, formulated within the framework of industrial land use policy, have affected the manufacturing groupings unevenly and have thus led to structural changes in the use of industrial land and premises. Thus, the general trend of rising land costs has contributed, to some extent, to the restructuring of Singapore's manufacturing.