Land Value Capture Research Articles

Land Premium Effects of Urban Rail Transit and the Associated Policy Insights for TOD: A Case of Ningbo, China

With considerable investments, mainly from local government budgets, the construction and operation of urban rail transit (URT) can exert significant spillover effects on the surrounding land use and land prices. In particular, China’s local governments are actively committed to developing their URT systems and promoting large-scale transit-oriented development (TOD) projects under the public land leasing policy. However, the connection between the land premium effects and TOD policy and practice is still lacking, particularly in the local government contexts, which exhibit significant policy and spatial heterogeneity. Thus, this research represents an attempt to better address this issue using the city of Ningbo as a case study. First, the premium effects of URT on land prices are examined, after which three crucial policy insights (land value capture [LVC], public–private cooperation [PPC], and urban regeneration) are proposed to enhance the effectiveness and efficiency of TOD, demonstrating its strong connection with the potential premium effects. The findings demonstrate that (1) local governments have adopted different innovative policies—with the ambition—to implement LVC; (2) assisted by PPC, the local rail transit authority can significantly amplify the premium effects, although it must still address the fair distribution of premiums across multiple stakeholders; and (3) transit-oriented urban regeneration can significantly influence land prices/land rents and subsequently generate significant gentrification, which will be further addressed by the TOD policy and practice.

Financing cleaner transportation: understanding changing trends in capturing developer contributions towards sustainable transport infrastructure

ABSTRACT Transportation and accessibility remain an important consideration in land use planning decision-making if modal shifts towards sustainable forms of transport are to be encouraged. Land value capture (LVC) mechanisms which gather developer contributions can provide new transport infrastructure which supports such a shift. Within England, this has traditionally been pursued through negotiated section 106 agreements, yet data suggest a significant decline in the value of these contributions for transport measures since 2010. This paper investigates the reduction to understand the reasons behind it and then considers the resulting implications for policy and LVC practices using a qualitative synthesis.

Spatial Efficiency and Socioeconomic Efficiency in Urban Land Policy and Value Capturing: Two Sides of the Same Coin?

Land policies are commonly used to contribute to the implementation of the public policy of land-use planning (or spatial planning). In this sense, a spatially efficient land policy must allow the planning systems to achieve the land uses promoted by strategic planning. In addition to their role in land-use planning, land policies also contribute to public finance policies. From this perspective, a socioeconomically efficient land policy must allow public authorities to capture land value. The research presented in this article aimed to contribute to planning theory by initiating a reflection on the interactions between spatial and socioeconomic efficiency in land policy. In our view, to consider those two dimensions in a more integrated way can help in the development of the growing research field on land value capture. Our research is based on the general assumption that there are processes of mutual strengthening and blockages between spatial efficiency and socioeconomic efficiency in land policy. In order to test this assumption, an international comparison methodology was developed. In order to develop a robust methodological approach, our exploratory comparative approach is based on a theoretical framework that depicts an ideal planning system. This ideal planning system serves as a benchmark for two empirical case studies on Norway and Belgium. Through our research, we find evidence of the interdependency of spatial efficiency and socioeconomic efficiency. The results of the two case studies therefore indicate that our initial assumption is generally confirmed. However further investigations are needed to deepen our exploratory discussion of the topic.

Examining the Effect of Urban Rail Transit on Property Prices from the Perspective of Sustainable Development: Evidence from Xuzhou, China

Urban rail transit (URT) promotes sustainable urban development by alleviating traffic congestion and environmental degradation. However, many cities have developed URT projects recently, often encumbering local governments with debt. Land value capture (LVC) is an important theory that explores the new financing modes for urban rail transit. Despite prior studies that have found a positive relationship between URT and property prices based on LVC, limited empirical studies explore sustainable paths to better examine the effect of URT on property prices. This study collects 1036 properties in Xuzhou, China. Meanwhile, multiple regression models are established to analyze the impact mechanism of URT on property prices, and to further examine the combination effects of multidimensional neighborhood infrastructure and URT on property prices from the perspective of sustainable development. The results show that the coefficients of URT in all models are negative, indicating that the property prices decrease as the distance from the URT to the property increases, and the positive coefficient of TRANS implies that the transfer station would raise house prices. Combining Park, School (and Hospital) variables with URT, respectively, the negative coefficients of URT increase from 0.0435 to 0.0846 and 0.0525, and these URT variables are significant, indicating that parks, schools, and hospitals can enhance the effect of URT on property prices. However, adding the Shopping variable, the negative value of URT drops from 0.0435 to 0.0192, and is not significant, which means shopping centers have a restraining impact. Moreover, the combination of parks and schools (and hospitals) can better enhance the effect of URT on property prices (the highest URT negative coefficient is 0.0870). This study can provide a reference for the government to facilitate URT planning and better decision-making.

The political economy of land value capture in the UK: Rent and viability in Salford’s new municipalist turn

This paper contextualises the political economy of land value capture (LVC) within the shift to an increasingly financialised, rentier-dominated capitalism. Contributing to an emerging dialogue between social constructivist planning literature on performativity in LVC and the critical political economy literature on rents and rentiership, we overview Salford's planning policy trajectory in recent decades in order to highlight how the UK planning system has increasingly been reconfigured as a mechanism to increase land values. In doing so, we explore both Salford's shift to neoliberal planning and its municipal socialist counter-turn in recent years, reflecting on how the centrality of LVC to the latter still leaves it dependent on rentier logics. In doing so, we locate these policy conjunctures within the governance dynamics of Britain's transformation into a rentier economy; wherein the stimulation, disbursement and capture of land values have become central objects of spatio-economic policy.

Governmentalities of land value capture in urban redevelopment

Major urban redevelopment projects entail the drawing upon and coordinating of vast resources including land, capital, and expert knowledge. At the core of urban redevelopment emerge policy instruments, including Land Value Capture (LVC), that smooth the way for desired project outcomes. This article explores three major urban redevelopment projects carried out by different coalitions of societal actors, often depicted as having irreconcilable interests and resources, in three Danish towns and cities—Aarhus, Aalborg and Køge. We suggest that a governmentality perspective, with its attentiveness to the rationalities and technologies activated in governmental projects, helps us to interrogate the ways in which the interests and resources of different actors are mobilised and reconciled for value creation in LVC based redevelopment. This paper argues that land value increment, central to LVC instruments, offers limited insight into accessing the success of, or ‘best practices’ in, LVC based redevelopment. LVC instruments create fields of action where the interests and resources of state and non-state actors can coalesce around broader, and some competing, ideas of value. Examining the conditions in which value is created, captured and used in LVC based redevelopment further challenges stereotypical views that depict the logics and practices of state and non-state actors as essentially antagonistic.

Institutional innovations from state-dominated to market-oriented: Price premium differentials of urban redevelopment projects in Shenzhen, China

Urban redevelopment has been widely acknowledged as a cure for the urban diseases relevant to urban deterioration, decayed environment, and limited land supply in the process of rapid urbanization and economic development in Chinese megacities. Given the slow and inefficient progress of traditionally state-dominated redevelopment because of high transaction costs, Shenzhen has been authorized to pioneer market-oriented urban redevelopment. Our study aims to assess how institutional innovations in urban redevelopment affect the market value of redevelopment projects. In line with this goal, major institutional innovations in market-oriented urban redevelopment are identified and analyzed. Furthermore, a number of hypotheses on whether these innovative rules affect the market value of redevelopment projects are developed. Two-stage regression models are employed, and all existing 183 urban redevelopment projects are used as samples to test these hypotheses. Our empirical findings indicate that the market premium (MP) of redevelopment projects is higher if the developer is the applicant compared with old factory owners, village committees, or the local government department as the applicants. Redevelopment projects from old residential properties gain a higher MP than those from old factory buildings. The MP of redevelopment projects from old factories on state-owned land is higher than that on collective-owned land. MP is higher for projects sited in larger urban redevelopment areas and for projects constructed with the public school as the developer obligation. These MP performances incurred by different institutional arrangements in market-oriented urban redevelopments have barely been revealed in previous studies. This study serves as a valuable reference for the government to make tailor-made land value capture schemes so as not to lose public value increases or kill redevelopment projects.

Analyze development potential in affected areas adjacent to urban public transit systems. Case study in the stations of Kim Ma and Van Phuc 2 (BRT Line No.1)

The Hanoi authority has been promoting the construction and completion of the Urban Mass Rapid Transit (UMRT) system, both BRT and urban railway. The idea of land value capture for economic development in areas around public transport systems is quite popular around the world. This is considered an effective approach to urban development planning in the big cities. The 3V framework is a holistic approach used to analyze the development potentials of the affected areas by transit stations. This method mentions 3 value groups composed of Node-value, Place-value, and Market-value which are defined under dimensions. The tools utilized to calculate these dimensions are GIS, mapping and surveying. Two stations on BRT line 1, Kim Ma and Van Phuc 2 were selected to study. The results of study showed that (1) there is a relation between spatial attributes, transport characteristics, market conditions and the development potentials; (2) having the advantages and obstacles to development in the affected areas around public transit transport. These results hopefully are the basis for further studies in other stations with the support of more credibly quantitative tools such as computer software and statistical methods.

The Local and Network Effects of Rail Transit Network Expansion on Retail Property Values

Using Singapore as an example, we find that the opening of new rail transit lines can boost retail property values in areas not only along the new lines (local effect) but also along the existing lines (network effect) due to the increase in network size. We also show the local effect of a new rail line changes over time at different development stages. Ignoring the time-varying local effect and the network effect could lead to biased estimates of the value-added of rail transit and misguide policy formation in rail transit investment, land value capture, and transit-oriented development.

Developing a Contextual Framework for Land Value Capture in Lagos, Nigeria

This study aims at developing a framework to guide the use of Land Value Capture (LVC) as a financing mechanism for infrastructure development in Lagos State, Nigeria. This is geared towards facilitating sustainable economic development in the region. Being a desk research, the methodology adopted was a literature survey. This was in order to identify baseline conditions necessary for the efficient application of LVC. The conditions identified, were then analyzed in terms of their workability within the context of the study area. Data was drawn from research articles, case studies, policy papers, and publications from relevant intergovernmental organizations. In addition to developing a framework, which guides the use of LVC in the study area, the study found that there is potential for the application of LVC in Lagos. Areas requiring minimal intervention include the existence of a vibrant property market and lead implementing institution. The state’s current inability to fully capitalize on LVC, are in the areas of having a strategic national vision, a clear policy framework, sound structure for institutional development finance, and an effective land title documentation system. This is the first study that develops a framework for the use of LVC specifically for Lagos. Further, the paper contextualizes the baseline conditions for LVC in Lagos, Nigeria, presenting an alternate finance mechanism for infrastructure development revenue in the region.

Kajian Land Value Capture Kota Semarang

The purpose of analyzing the application of the Land Value Capture (LVC) approach in infrastructure development. This study uses a qualitative methodology to gain an understanding of the concept of value capture and institutional design approaches in certain contexts. The approach method that will be used to carry out this work is in the form of: inventory, analysis and discussion which can further be in the form of: Desk Study (literature study): best practice, related literature and Primary Survey: direct observation in the field. The results of the study are the following factors: the determinants of the success of the implementation of the LVC policy in Semarang City are very likely to make LVC an alternative funding for infrastructure, however, in order to achieve the successful implementation of LVC, the Semarang City government must be able to overcome various challenges.

Mass appraisal as affordable public policy: Open data and machine learning for mapping urban land values

Updated cadastral land values are a matter of critical importance for local governments: higher revenue of property taxes, more equitable treatment to taxpayers, a fundamental input in the design of public policies related to access to land and housing for the most vulnerable and a key feature in land value capture strategies to finance public infrastructure, to name just a few public policies that require correct valuations of land. However, in Latin America, outdated cadastral values are common to most cities. The reasons for this can be found in the complexity of the mass appraisal process, lack of institutional and fiscal capacity to undertake it and bureaucratic resistance to its implementation.The objective of this paper is to present a mass appraisal methodology that uses only free and open data to achieve robust urban land valuations. Information from the OpenStreetMap Project is used to generate several land variables. In addition, the Global Human Settlement Layer of the European Commission is used to determine the level of consolidation of urban sprawl. Land value data were obtained from the Mapa de Valores de América Latina, a collaborative initiative that systemizes more than 68,000 data from more than 900 cities.This information is used to train three tree-based machine learning models: Random Forest, Quantile Random Forest and Gradient Boosting Model. The results support the viability of the proposed strategy, simplifying the mass appraisal process in terms of costs, time and complexity of the information used.

The influence of recurrent property income and expenditure on house prices in European Union countries: Evidence from a panel model

Abstract Land value capture can be defined as a policy approach that allows communities to restore and reinvest land value increases that result from public investment and other government actions. For that reason, public action should generate public benefit. The recurrent property tax, one of many tools for land value capture, is the foundation of a stable, enduring revenue source that supports the provision of essential housing and amenities services. This empirical paper aims to examine the influence of recurrent property tax income, and general government spending on housing and community amenities on house prices. To assess the hypothesized direction of the effects, yearly data structured in a balanced panel on a sample of 26 European Union economies from 2010 to 2019 was used. Fixed effects regression model with Driscoll and Kraay standard errors was employed and the results confirmed a negative but statistically insignificant effect of increased property tax revenue on house prices, while increased expenditure on housing and amenities confirmed a positive and statistically significant effect on house prices dynamics in European Union countries.

Non-linear effects of developer obligation on property prices: A perspective of land dedication in China's bottom up urban redevelopment

Developer obligations (DOs) have been increasingly adopted to capture land value increases and finance urban infrastructures in countries around the world. The practice of DOs in China emerged mainly for the purpose of urban redevelopment. This research attempts to examine how DOs affect the property prices of redevelopment projects from the perspective of land dedication in China's bottom up urban redevelopment. The hedonic pricing model and spatial economic models are applied to 2357 real property transaction price samples for analyzing the DO effects in Shenzhen, China. Research findings reveal that DOs have positive impacts on the property prices of redevelopment projects. Thus, developers and property owners do not have to be against the fulfillment of their obligations. Furthermore, empirical results indicate a non-linear relationship between DOs and property prices: with the increase of DOs, property value premiums present an inverted U-shaped curve (increase first and then decrease). The redevelopment projects with 27%–38% land dedication ratio have the highest value premium. The reasons for the inverted-U shaped effects are further analyzed. The findings from this study provide valuable references for decision makers to formulate effective and tailor-made DO strategies in the field of land value capture and urban redevelopment.

Self-financing regeneration? Capturing land value through institutional innovations in public housing stock transfer, planning gain and financialisation

Social, economic and environmental aspects of building sustainable communities receive ample academic and policy attention; far less is paid to finding financially sustainable models of urban regeneration. This case study of the Hattersley Estate in Greater Manchester, England, provides insights into an innovative approach to financing estate regeneration via novel mechanisms of planning gain, stock transfer and tenure diversification, influenced by the Mixed Communities agenda. In the context of enduring spatially concentrated deprivation, state withdrawal of regeneration funding and residualisation and neglect of public housing stock by an absentee landlord - together rendering estate renewal too expensive for conventional stock transfer - regeneration partners have instead sought to leverage local land values for a ‘self-financing’ method of regeneration. This article describes how a novel business model and financialisation fix were conceived and implemented for Hattersley’s relatively successful estate regeneration; explores the political-economic implications and contradictions of this financialised approach for urban development trajectories; and draws critical connections between research on financialisation, land value capture and municipal entrepreneurialism.

Land Value Capture and Transit Oriented Development (TOD): A Comparative Review of Indian TOD Policies Measures

Several Indian metropolitan cities are willing to adopt and explore various methods to implement transit-oriented development (TOD) around their transit stations to reverse the ongoing trend of automobile-oriented urbanization. Implementation of development-based Land value capture (LVC) schemes in emerging middle-income countries asks to understand and adapt to locally-specific favorable macro conditions such as rising real-estate incomes, increasing automobile dependency, and traffic congestion which all together endow to appreciate land values near transit stations or corridors. This paper identifies enabling TOD linked factors and indicators to measure them besides transit investment that may influence Development-based LVC mechanism and TOD based investment in transit station areas or corridors. To achieve the desired study goal, this study identified 13 indicators directly related with six TOD dimensions to evaluate Indian TOD policies formulated at various levels. By doing so, it will determine new innovative funding opportunities available to implement and integrate lacking land-use and transit planning mechanisms and proposing a land-value capture strategy with lacking a clear framework for Indian cities. The study revealed that population densities, particularly employment densities, length of blocks and intersection intensities, electric charging stations, multimodal integration and smart apps provision are largely lacking in the most Indian TOD policies framed. The current ongoing TOD policy formulation is only limited to increase densification by permitting higher than permissible Floor Area Ratio (FAR), providing parking facility and its management, and allowing land-use mix.

Balancing equity-based goals with market-driven forces in land development: The case of density bonusing in Toronto

This article explores the connections between planning and land rent through a case study of density bonusing in Toronto, known as ‘Section 37’ – a form of land value capture. Density bonusing facilitates speculative bidding on future rents by private developers seeking ‘highest and best’ land uses – or efficient land uses – yet has implications related to equity when the unearned increment is extracted to recover value and invest in public goods. We situate land value capture within debates on the unearned income derived from land development in cities. We view the case of density bonusing through the lens of discretionary planning systems operating through flexible mechanisms. Specifically, we consider the direct role of planners towards balancing private interests with public goods in the face of shifting market and political contexts. The findings show that securing public goods from private land development through the unearned increment lacks consistency and predictability when the flexibility exercised by development actors drives planning decision-making. We conclude with a discussion on the implications for discretionary planning and land value capture in market-intensive, neoliberal environments.

Land Value Capture from Touristic Development: Methodological Approach and Practical Implementation

Abstract Considering the increasing touristic supply and demand, globalization, and the entailed increases in property prices, which strategies and instruments should urban planning use to take adv...

China’s extended urbanization driven by the “consumption city” in the context of financialized ecological civilization

This article seeks to address current debates on ongoing China’s urban development and makes a theoretical proposal that links financialization and ecological civilization through the perspective of the increasing role of consumption in today’s transition to an upgraded domestic economy. While both financialized land value capture and the role of quality are now fundamental to the construction of the built environment in Chinese cities, we argue that the “consumption city” refers to an economic and urban production process as well as to a societal transformation. First, the economic upgrading has gone along with a greater mobility of people travelling ever longer distances who spend their income or invest in the places they travel to rather than necessarily their places of residence or of work. To attract these consumers, whether they are residents, tourist or property investors, the quality of the living and consumption environments play a dominant role in the complex urban production and in governance, beyond the classic model of development based on the city as a production place. Simultaneously, the rising role of financialization by external households as investors raises the issue of how and to what extent the construction of consumption places has been a way for the state to further enhance the land value capture in (new or not) cities. Second, as the latest government strategy, ecological civilization is part of a social engineering process aiming to shape people’s lifestyles in terms of both their everyday consumption practices and their mindsets. The current transition aims to “civilize” citizens by enlarging the scope of urban consumers beyond the upper and middle classes to people from rural areas who are encouraged to become urban. Ecological civilization promotes a better quality of life for all, together with new outdoor and experiential activities, although this comes with a high ecological footprint.

A systemic model for implementing land value capture to support urban rail transit infrastructure projects

Urban rail transit (URT) infrastructure is critical for the economic and social development of an economy. The construction and operation of URT systems invariably require significant investment. Yet, governments are often subjected to fiscal constraints and cannot provide taxpayers with efficient and effective rails services. Development-based land value capture (LVC), a method for funding and financing infrastructure, can support URT delivery. However, there has been a tendency to apply LVC in a piecemeal manner. Thus, an absence of a systemic strategy to assist policy-makers with the implementation of LVC contributes to the ongoing debate about its effective use to support URT. Using the lens of systems thinking, our research aims to address the following research question: How can governments create an effective LVC strategy to support the procurement of their URT systems and networks? Drawing on the experiences of three Chinese cities, we develop a systemic model that policy-makers can draw upon to ensure the successful implementation of LVC. The contributions of our paper are threefold as we: (1) summarise the threads of LVC knowledge and its associated challenges; (2) provide the state-of-art experience of three cities that are using LVC to support their URT projects; and (3) identify the underlying systemic interdependencies that influence the successful adoption of the LVC strategy to support the URT system and network.