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Measuring the Outcomes of Anticommons in Land Development

European Real Estate Society 21 st Annual Conference Bucharest, Romania 25-28 June 2014 . Measuring the Outcomes of Anticommons in Land Development. Tzuchin Lin, Fanghsin Huang Department of Land Economics National Chengchi University Taipei, TAIWAN. Outlines.

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Measuring the Outcomes of Anticommons in Land Development

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  1. European Real Estate Society 21st Annual ConferenceBucharest, Romania 25-28 June 2014 Measuring the Outcomes of Anticommons in Land Development Tzuchin Lin, Fanghsin Huang Department of Land Economics National Chengchi University Taipei, TAIWAN

  2. Outlines • The Inert Housing (Land) Supply is Overlooked • Land Assembly likely Leads to The Anticommons Tragedy • Wanhua District needs to be Revitalized • The Size of Developed Parcels is Larger than Undeveloped Parcels • Land Parcels have been slowly but Persisently Assembled • Wrestling between Urban Development and Property Rights is Inevitable

  3. The Inert Housing (Land) Supply is Overlooked

  4. Alonso: a demand-dominated thinking The Revival of the Supply Side • Alan Evans (1983): The determination of the price of land, Urban Studies • Max Neutze (1987): The supply of land for a particular use, Urban Studies • David Adams (1991): Active and passive behavior in land ownership, Urban Studies • Edward Glaeser (2009): The causes and consequences of land use regulation: Evidence from Greater Boston, Journal of Urban Economics Land scarcity: attachment, speculation, regulations…, but, anything missing?

  5. Number and Areas of Privately-owned Land Parcels – Taipei City

  6. Number and Areas of Privately-owned Land Parcels – by Districts

  7. Total Price V(2A) Land Assembly likely Leads to The AnticommonsTragedy 2V(A) • TakatoshiTabuchi (1996), Peter Colwell and Henry Munneke (1999), Tzuchin Lin and Alan Evans (2000) V(A) Area A 2A

  8. Land assembly implicit in the convex size-price function • any owner whose parcel is needed for development is on a position to negate the project by refusing to sell • potential gains through land assembly allure all owners to think strategically so as to convert their parcels to be the last key piece • high transaction costs of land assembly likely induce a bias toward fragmentation in ownership.

  9. Anticommons Heller (1998) • the danger of a property regime in which multiple owners hold effective rights of exclusion in a scarce resource • individual owners within this regime are prone to exercise their rights of exclusion that will in turn lead to an inefficient and under-utilized use of resources • a potential tragedy JiemingZhu (2012) • owners’ strategy of holding land out of market nicely exemplifies the possible tragedy of the anticommon

  10. Wanhua District needs to be Revitalized

  11. Plan Area: 39.5 hectares Developable Area: 23 hectares

  12. another attempt to empirically test the tragedy of anticommons - if this tragedy is in place -- assembly of small parcels into a larger and developable one will be difficult therefore, - size of developed parcels is larger than that of undeveloped parcels - developed parcels largely come from assembly of small parcels - this assembly activity is labourious, time-consuming and even socially wasteful

  13. The Size of Developed Parcels is Larger than Undeveloped Parcels Article 193 of Regulation of Land CadastreSurveying: The owner of abutting plots with similar land use can apply to have them merged into a single plot under sole ownership

  14. Land Parcels have been slowly but PersisentlyAssembled

  15. GiniCoefficient - on a steady rise from 1977 onwards when cadastral re-surveying took place - a long-term increase in unevenness of size distribution among parcels - an increasing dispersion of parcel sizes suggests frequent activities of assembly and partition of land - developers might either purchase a larger plot, or buy contiguous smaller plots (land assembly)

  16. a total of 799 times of size change; including 627 times of land assembly and 172 times of land partition • up to plots of 600 m2, the frequency of land assembly increases with plot size (scale of development project) • the whole Wanhua train station areas will take 76 years to be fully developed

  17. Wrestling between Urban Development and Property Rights is Inevitable • In Taipei, land supply is bound to be inelastic and parcel size to be slow in adjustment • This lengthy process of adjustments in parcel size has resulted in an inert response to the market, and possibly undesirable land uses • But • - any coercive measure to force owners to sell his plot or merge it with others is fairly impractical, as recent cases have repeatedly demonstrated • - sensible policies are therefore urgently called for

  18. Thank your for listening!

  19. 5-storey building

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