2 The Urban Markets The dimensions of markets: product; quantity and price.Conditions of land Markets :land for development or transfer, sellers and buyers, open and free transaction, dynamic price, information intensive, and competition.Land market mechanismLand tenure systemLand policies and government intervention
3 Urban Land Market Performs Four Functions Bring buyer and seller together to facilitate transactionsSet prices for landQuantity of land offered for sale equals the quantity of land demandedLand prices play an important role in ensuring that land is efficiently used
4 Demand and Supply Factors Needs,demand and desireDirect demand and derived demandThe law of demandPhysical supply and economic supplyPhysical land supply can be elasticThe law of supply
5 Urban Land Markets in Developing Countries Understanding land markets in African urban areas: the case of Dar es Salaam, TanzaniaLand markets in urban Africa have not been well studied. There is considerable evidence that most landowners in urban Africa obtain land by way of purchasing it from recognized owners, be they in the planned or in the unplanned sector. A study gives insights into some aspects of the land markets in urban Africa, taking the case of Dar es Salaam in Tanzania as an example.
6 Urban Land Markets in Developing Countries China's land market:-- Current situation, problems anddevelopment trends.Recommended Reading:The role and function of land market in market economy--David E. DowallThe Nature of the Market Annette HurrelmannThe price of land –- extracted from ‘The Mega-city of Latin American’Is the Real Estate Market Voluntary? Fred E. FoldvaryExampleUnderstanding land markets in African urban areas: the case of Dar es Salaam, Tanzania J. M. L. Kironde
7 Urban Land Markets in Developing Countries China's land market came into being to serve the needs of the development of a socialist-market economy. As a result of the reforms and development that have been carried out in the past seven years, China's land market had come into shape as a system.
8 Land Market and in Urban Economy Land is the platform for economic activity.Land market as the main vehicle to invest,transfer wealth.Land use allocation influences urban economy.Infrastructure allocation influences urban productivity.Land use and infrastructure influence market efficiency.Urban economy influence land use, land markets.Land market distortion retard urban economic growth .Economic productivity related to revenues/costs.Land market related to urban labour market, capital market.
9 Land Market and in Urban Economy Reading:Land Price As A Cause Of Poverty--Winston Churchill'sInformality, Urban Poverty and Land Market Prices Article--Smolka, Martim O
10 Land Prices and Land Bids The most important Factors affect the level of land price bids:Type of developmentDensity of developmentLocation of plotCost of constructionCost of infrastructureCost of financingTaxesDemand for developmentSupply of landLevel of competition
11 An Efficient Land Market: Characteristics The system governing the the land market encourages quick development and transaction of land.Government has goals for land developmentInitiative efficient land registration and land informationsystemActive active supply and demandLegislative - Ensured formal land transaction
12 An Efficient Land Market: Characteristics Equitable:The system governing the land provides reasonable access to all income groups and individuals.Equitable access to land and houseEquitable access to transaction(bid, auction)Equitable access to creditLand market transparencyLand policies and government interventionRemove distorted price and provide affordable house
13 An Efficient Land Market: Characteristics Environmentally sound:Protects land source sustainable use for the good of both current and future usersEcological sustainabilityEnvironmental remediationPollution reductionUrban greening
14 An Efficient Land Market: Characteristics Example:Environmental sustainability, community safety and economic development--Australia 2002Urban Environment Development of Dalian City, Liaoning Province, China--China 2002
15 An Efficient Land Market: Characteristics Compatible:The system governing the land markets is integratedwith other laws and regulations governing land.Planning—land development strategyTaxation--development controlProvision of public infrastructure and services -- safe water provision, sanitation, waste, management and treatment
16 An Efficient Land Market: Characteristics Example:Provision of infrastructure for a Housing Development in Temba--South Africa 2000Comprehensive Approach to Urban Development in Tamil Nadu, India--India 2000Comprehensive Revitalization of Urban Settlements, Chengdu ---China 2000
17 Requirements for Efficient Land Market Well defined property rightsVoluntary participationBuyers and sellersFree entry and exitInformationSimilarity of productExample:Trend of Market-Oriented Land Transaction china 2003Structural Changes in the Land Market in Japan --Japan 2002
18 Requirements for Efficient Land Market Efficient functioning of land markets requires efficient and updated land registration systems which clearly indicate legal ownership of land.Land Registration is defined as the process of maintaining a register of real rights in land and includes registers of title and registers of deeds.A Land Register is described in some jurisdictions as an Immovable Property Register or as a Cadastre.
19 Distortion of a Poor Functioning Land Market A poor functioning land market leads to ills :Land speculationCreation of slums and squatter settlementsEnvironmental deteriorationAn inefficient urban development patternAdverse affections to urban economy
20 Distortion of a Poor Functioning Land Market Example :Bubbles of Japan Urban Land Markets. – KAZUO SAT0Land,productive slums and urban poverty-- Solomon Benjamin
21 Land SpeculationThe process of buying land based solely on its current market price in the hope that future market prices will be higher. It occurs when the demand for land, at the present time or in the near future, outstrips the supply of land.Rampant land speculation cause a ‘bubble’ land and property market, where prices of land and property are overprice,drive urban poor out of informal land market, pushing them into squatter settlements, illegal subdivisions and slums.
22 Land Speculation Demand side: Supply side Rapid economic growth Lack of opportunities for investigation in othersectorsSupply sideBottleneck of availability in serviced land from in theland development phase and land transaction phase.-- Slow provision of infrastructure and services-- Poor city planning-- Poor land records-- Cumbersome procedures for buy and sell land orproperty
23 Land Speculation Economic cost Environmental cost - Increasing the cost of land investment;- Creating ‘bubble’ economy;- Have been blamed for triggering the financial crises in South East AsiaEnvironmental cost- Decreasing of green land- Increasing the amount of water leakage- Increasing the costs of disposing urban waste water and solid wastes.- Causing traffic pollution and air pollution.
24 Land Speculation Social cost - Driving the urban poor out of the formal urban land market,- Causing squatter settlements, illegal subdivisions and slums- Increasing the cost of living- Causing poor health and entrench the cycle of poverty.
25 Land Speculation Reading: Land Speculation: What Is It Bad For? --Fred E. Foldvary, 2003Lessons Learnt from Housing Speculation in Bangkok Sopon Pornchokchai 2003Land Speculation and the Boom/Bust Cycle
26 Methods to Reduce Land Speculation The various taxes to reduce land speculation in the case-studies is provided in table.
27 Methods to Reduce Land Speculation Overview of regulations to reduce land speculation1BandungDhakaHuéMakatiPenangLimitation of land ownershipN.A.Under considerationLimitation on foreign ownershipProperty tax on vacant landYesCapital gains tax3 per cent of gross transfer value0-20 per cent depending on income level and/or duration of ownership5 per cent of gross transfer value or fair market value (if higher)Excess land holding tax N.ABetterment taxLegal provision existsWindfall taxBill under considerationMethods to Reduce Land SpeculationWP2
28 Methods to Reduce Land Speculation Land speculation was a main reason for land being vacant.Few regulations which attempted to encourage capital investments on land instead of using land for capital storage and accumulation,Available tools typically suffered from poor performance record.Almost all case-studies levied a capital gains tax and most applied a property tax on vacant land.Not one case-study applied limitations on land ownership or excess land holding tax.
29 Methods to Reduce Land Speculation The collection rate would not be more than 60 per cent of the actual cost.The Philippines was the only country where a special tax on vacant land existed and attempts were also being made to collect windfalls profits (unearned increments) to the public sector through a specific tax for this purpose.Typically the case-studies appeared to have poor implementation records regarding taxes to reduce land speculation.