Timing Of Land Development Research Articles

Institutional factors and the timing of land development: a survival analysis applied to the GZM Metropolis in Poland

PurposeThe purpose of the article is to improve the understanding of the role of institutional factors in real estate development. The authors take into account zoning (existence and type), type of right of disposal and type of buyer and seller of property in a multivariate econometric estimation. Dependent variable of the analysis is the time between acquisition of empty land and the application for a building permit, a period when many important development decisions have to be made. This indicator is closely related to debated phenomena like land hording and speculation.Design/methodology/approachThe authors estimate a Cox proportional hazard model with the time between acquisition and application for a building permit as dependent variable and institutional indicators and a number of control variables as explanatory variables. Study area is the GZM Metropolis in the South of Poland. This region shows enough variability in institutional arrangements to allow for this type of analysis.FindingsThe analysis shows that institutional factors significantly influence the real estate development process. In areas that have not issued a zoning plan, the period until the building permit application is significantly longer. When the state is involved in a transaction (as purchaser or seller), it also takes longer until the building permit application is submitted. Although the instrument is usually intended to speed up development, perpetual usufruct implies a longer period until building permit application. Because of the results the authors get for control variables and for robustness checks, the authors are confident of the results of the analysis.Originality/valueTo the authors’ knowledge, this is the first study that deals with the question how institutional factors influence the timing of real estate development. By using data for a region in Poland, the authors also add to knowledge about real estate development in CEE countries.

Optimal statute of limitations under land development timing decisions

In a recording title system, a landowner faces two risks: the risk of a claim from a previously dispossessed owner and risk of being dispossessed by adverse possession, squatting, or encroachment. In this study, we build a real options model to investigate the issues regarding the optimal statute of limitations. In the absence of any uncertainty, a longer statute of limitations delays land development, and thus a regulator may allow for a more lenient policy of statutory limitations for land located in the suburb than in the city center. At any given location, greater uncertainty in urban rents will cause a landowner to wait longer. Anticipating this outcome, the regulator should shorten the statute of limitations to increase the likelihood for the current owner to retain title.

Land acquisition outcome, developer risk attitude and land development timing

Based on the matched date of initial vacant land parcels and final completed housing projects in Beijing of China from 2003 to 2015, we investigate the correlations of land acquisition outcomes, developer risk attitude and land development timing. We find that real estate developers’ land acquisition gains or losses relative to a referential land acquisition cost have significant impacts on their decisions of land development timing. Developers will postpone the land development process after prior losses in the land acquisition stage. By introducing behavioral economics into the real option model of land development, we explain this relationship from the perspective of varying risk attitude of real estate developers.

Uncertainty, Competition and Timing of Land Development: Theory and Empirical Evidence from Hangzhou, China

Considering the existence of strong policy intervention in China, this paper introduces policy uncertainty into standard Real Options framework, and provides a theoretical explanation for the land development decision in an emerging market. Based on survival analysis, we examine the determinants of timing of land development empirically, using a sample of 783 residential projects in Hangzhou, China from 2005 to 2011. We use monetary policy indices as measurement of policy environment, and results verify our theoretical prediction that when the expected policy is positive, an increase in policy uncertainty significantly lowers the likelihood of land development; otherwise, policy uncertainty accelerates land development. However, market uncertainty fails to meet the prediction of standard Real Options, which indicates that developers in China focus more on policy uncertainty rather than market uncertainty in exercising their real options. We further find that in the face of declining demand, price volatility significantly accelerates land development, which verifies Grenadier, The Journal of Finance, 51(5), 1653–1679, (1996)’s prediction of “Recession-induced Construction Booms”. Empirical finding also verify that competition alone exerts a negative effect on development timing and also has a positive crossing effect with policy uncertainty.

Policy and Planning Challenges to Promote Efficient Urban Spatial Development during the Emerging Rapid Transformation in China

This paper investigates the linkage between emerging urban spatial development and institutional arrangements in China. Emerging spatial patterns, which are prevalent and sizable so that any impacts will be substantial, include dispersed employment concentration, fragmented land development, over-scaled land development, leapfrogging development, and whack-a-mole development. From the institutional point of view, these patterns are associated with decentralization, fiscal incentives for local government, land regulations, and fragmented planning system. It is concluded that these emerging spatial patterns significantly affect long term city sustainable growth and comprehensive reforms are needed to promote efficient urban spatial forms. It is further concluded that labor division between planning and markets should be reshaped in determining urban spatial growth by shifting planning to focus on zoning that provides sufficient development room in a long term and making markets to decide the timing of land development.

The Timing of Land Development: An Invariance Result

AbstractThe Arrow‐Fisher‐Henry (AFH) analysis of land development under uncertainty has been conducted in a two‐period model. Recently, Capozza and Helsley (1990) and Batabyal (1995) have addressed the question of land development under uncertainty in a many‐period setting. In this paper, aspects of this literature are extended by analyzing the land development question in a Markov decision theoretic framework. Inter alia, it is shown that the timing of land development is invariant to the manner in which a landowner uses information about the consequences of development.

Land development timing: Effects of uncertainty in income and tax policy

This paper investigates several sources of uncertainty and their effects on the optimal timing of land development. The method of Meyer and Ormiston (1983, 1985) for strong increases in risk and their comparative statics, is applied. There are three basic results. First, a strong increase in risk in the pre-development income stream speeds the development process, regardless of whether the random effect is incorporated in an additive or multiplicative form in the model. Second, strong increases in risk in pre-development property tax rates delay development. Finally, a strong increase in risk in the post-development income stream results in a slower development process.

LAND DEVELOPMENT TIMING: EFFECTS OF UNCERTAINTY IN INCOME AND TAX POLICY

ABSTRACT This paper investigates several sources of uncertainty and their effects on the optimal timing of land development. The method of Meyer and Ormiston (1983, 1985) for strong increases in risk and their comparative statics, is applied. There arc three basic results. First, a strong increase in risk in the pre-development income stream speeds the development process, regardless of whether the random effect is incorporated in an additive or multiplicative form in the model. Second, strong increases in risk in pre-development property tax rates delay development. Finally, a strong increase in risk in the post-development income stream results in a slower development process.

Zoning Rights and Land Development Timing

Zoning Rights and Land Development Timing

A stochastic analysis of land development timing and property valuation

Land development decision rules and property valuations are derived for a land-owner facing uncertain future rentals and land development costs. The qualitative effects of the different types of uncertainty on the timing and structural density of land development are assessed. Crucially, since vacant land possesses an option value, uncertainty is shown to increase its value proportionately more than it increases the value of developed property.

Property taxes and the timing of urban land development

This paper develops an optimal timing model which extends our understanding of the effects which property taxes have on the timing of land development. Comparative static effects of changes in property tax rates are investigated and policy rules are developed for the use of differential pre- and post-development tax rates to affect the timing of development. Changes in the property tax rate are found to be non-neutral with respect to the timing of development in most cases, accelerating or delaying development depending upon specific market conditions.

MORE ON THE NEUTRALITY OF LAND TAXATION

The recent conclusions about the nonneutrality of land value taxation are shown not to invalidate the neutrality result for per unit land taxation (or even use-independent land value taxation, as in Vickrey's standard state scheme). Also the neutrality of current rental income taxation is shown to depend on time-invariant tax rates; if tax rates change over time, the timing of land development can be distorted in a way similar to that which occurs under current market value land taxation.

Site Value Taxation and the Timing of Land Development

Abstract. Recent writers have challenged the traditional view that a tax on site value is neutral, but there is still disagreement as to the effects of the tax. The site value tax affects the timing of land development in that it provides an incentive for landowners to develop land sooner than under a property tax levied on improvements also. Confusion has resulted from a failure to distinguish market value from development value. The incidence of the site value tax must take into account the dynamics of untaxing capital and of the capitalization of the tax increase on land values, as well as of the resulting increase of land supply and its effect in further reducing land values. The increased profitability of capital improvements could then increase land rent from the demand side. Obviously, amidst such dynamic changes, the overall effect on land values and rents is unsettled pending further research.

Market Power and Land Development Timing

noticed the trend in recent years toward larger development projects. As a careful observer of these markets, the Urban Land Institute notes that dramatic shifts in the scale and characteristics of real estate development projects have occurred. . . . Projects have become increasingly broad in scope, more complex, and involving much greater capital investment (Wilburn and Gladstone 1972, p. 9). Factors cited as contributing to the trend are public programs like urban renewal and Title VII new, community loan guarantees and grants, and new capital sources brought about through the corporatization of the development industry. An indisputable consequence of this trend is that development decisions devolve to a smaller number of agents. This challenges the traditional view of economists that real estate markets are competitive and raises some of the market power issues long associated with industrial markets. The purpose of this paper is to examine the consequences of market power in real estate markets on the timing and efficiency of development.