How do land use regulations influence industrial land prices? Evidence from China
Abstract
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.
First published online 28 December 2020
Keyword : industrial land use, industrial land price, land use regulation, land use planning, land marketization, land use efficiency
How to Cite
Tu, F., Zou, S., & Ding, R. (2021). How do land use regulations influence industrial land prices? Evidence from China. International Journal of Strategic Property Management, 25(1), 76-89. https://doi.org/10.3846/ijspm.2020.14051
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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https://doi.org/10.2139/ssrn.936351
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https://doi.org/10.1007/s10661-019-7547-4
Lin, S. W., & Ben, T. M. (2009). Impact of government and industrial agglomeration on industrial land prices: a Taiwanese case study. Habitat International, 33, 412–418.
https://doi.org/10.1016/j.habitatint.2009.01.001
Lockwood, L. J., & Rutherford, R. C. (1996). Determinants of industrial property value. Real Estate Economics, 24(2), 257– 272. https://doi.org/10.1111/1540-6229.00690
Ministry of Housing and Urban-Rural Development, P. R. China. (2017). China urban and rural construction statistical yearbook. China Planning Press.
National Bureau of Statistics of China. (2017). China statistical yearbook. China Statistics Press.
Peiser, R. B. (1987). The determinants of nonresidential urban land values. Journal of Urban Economics, 22(3), 340–360. https://doi.org/10.1016/0094-1190(87)90032-5
Peng, Y., & Liu, X. (2015). Bidding decision in land auction using prospect theory. International Journal of Strategic Property Management, 19(2), 186–205. https://doi.org/10.3846/1648715X.2015.1047914
Quigley, J. M., & Rosenthal, L. A. (2005). The effects of land use regulation on the price of housing: what do we know? What can we learn? Cityscape, 8(1), 69–137. http://urbanpolicy.berkeley.edu/pdf/QR2005.pdf
Rosen, S. (1974). Hedonic prices and implicit markets: product differentiation in pure competition. Journal of Political Economy, 82(1), 34–55. https://doi.org/10.1086/260169
Saz-Salazar, S. D., & Leandro, G. M. (2005). Public provision versus private provision of industrial land: a hedonic approach. Land Use Policy, 22(3), 215–223.
https://doi.org/10.1016/j.landusepol.2004.05.002
Shen, X., & Sun, X. (Eds.). (2012). Untying the land knot: making equitable, efficient, and sustainable use of industrial and commercial land. The World Bank. https://doi.org/10.1596/978-0-8213-8970-6
Sun, Y. F., Ma, A. B., Su, H. R., Su, S. L., Chen, F., Wang, W., & Weng, M. (2020). Does the establishment of development zones really improve industrial land use efficiency? Implications for China’s high-quality development policy. Land Use Policy, 90, 104265. https://doi.org/10.1016/j.landusepol.2019.104265
Thompson, B., & Tsolacos, T. (1999). Rent adjustments and forecasts in the industrial market. Journal of Real Estate Research, 17(2), 151–167.
Thompson, B., & Tsolacos, T. (2001). Industrial land values – a guide to future markets? Journal of Real Estate Research, 21(1–2), 55–76.
Tu, F., Ge, J. W., Zhong, Q., & Liu, D. X. (2017). Determinants of industrial land price in the process of land marketization reform in China. China Land Science, 31(12), 33–41.
Wang, H., Tao, R., Wang, L. L., & Su, F. B. (2010). Farmland preservation and land development rights trading in Zhejiang, China. Habitat International, 34(4), 454–463. https://doi.org/10.1016/j.habitatint.2009.12.004
Wang, J. T., Cao, Q. F., & Tian, S. Y. (2012). Industrial agglomeration, government intervention and industrial land prices: an empirical study on 35 Cities in China. China Land Science, 26(9), 12–20. https://doi.org/10.13708/j.cnki.cn11-2640.2012.09.008
White, H. (1980). A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity. Econometrica: Journal of the Econometric Society, 48(4), 817–838. https://www.jstor.com/stable/1912934
Wu, Y. Z., Zhang, X. L., Skitmore, M., Song, Y., & Hui, E. C. M. (2014). Industrial land price and its impact on urban growth: a Chinese case study. Land Use Policy, 36, 199–209. https://doi.org/10.1016/j.landusepol.2013.08.015
Wu, Y. Z. (2007). On regional equilibrium of industrial land price and management strategy based on game theory. Journal of Zhejiang University (Humanities and Social Sciences), 37(4), 124–133. http://en.cnki.com.cn/Article_en/CJFDTotal-ZJDX200704018.htm
Zhang, X. L., Lin, Y. L., Wu, Y. Z., & Skitmore, M. (2017). Industrial land price between China’s Pearl River Delta and Southeast Asian regions: competition or coopetition? Land Use Policy, 61, 575–586. https://doi.org/10.1016/j.landusepol.2016.12.011
Zhao, S., & Xiao, X. J. (2012). Analysis on the land price factors in the context of macro-level framework. China Land Science, 26(9), 4–12. https://doi.org/10.13708/j.cnki.cn11-2640.2012.09.007
Zhou, L. A. (2007). Governing China’ s local officials: an analysis of promotion tournament model. Economic Research Journal, 7(36), 36–50. http://en.cnki.com.cn/Article_en/CJFDTotal-JJYJ200707006.htm
Atteberry, W. L., & Rutherford, R. C. (1993). Industrial real estate prices and market efficiency. Journal of Real Estate Research, 8(3), 377–385. https://www.jstor.com/stable/44095452
Black, J. T., & Hoben, J. E. (1985). Land price inflation and affordable housing. Urban Geography, 6(1), 27–47. https://doi.org/10.2747/0272-3638.6.1.27
Braimoh, A. K., & Onishi, T. (2007). Spatial determinants of urban land use change in Lagos, Nigeria. Land Use Policy, 24(2), 502–515. https://doi.org/10.1016/j.landusepol.2006.09.001
Brueckner, J. K., Fu, S., Gu, Y., & Zhang, J. (2017). Measuring the stringency of land use regulation: the case of China’s building height limits. Review of Economics and Statistics, 99(4), 663–677. https://doi.org/10.1162/REST_a_00650
Callahan, M. F. (2017). Using transactional and spatial data to determine drivers of industrial land value. Massachusetts Institute of Technology, Boston. https://dspace.mit.edu/handle/1721.1/113483
Fehribach, F., Ronald, R., & Mark, E. (1993). An analysis of the determinants of industrial property valuation. Journal of Real Estate Research, 8(3), 365–376. https://www.jstor.com/stable/44095451
Fu, Y., & Somerville, C. T. (2001). Site density restrictions: measurement and empirical analysis. Journal of Urban Economics, 49(2), 404–423. https://doi.org/10.1006/juec.2000.2200
Glaeser, E. L., & Ward, B. A. (2009). The causes and consequences of land use regulation: evidence from Greater Boston. Journal of Urban Economics, 65(3), 265–278.
https://doi.org/10.2139/ssrn.936351
Guntermann, K. (1995). Sanitary landfills, stigma and industrial land values. Journal of Real Estate Research, 10(5), 531–542. http://pages.jh.edu/jrer/papers/pdf/past/vol10n05/v10p531.pdf
Han, W., Zhang, X., & Zheng, X. (2020). Land use regulation and urban land value: evidence from China. Land Use Policy, 92, 104432. https://doi.org/10.1016/j.landusepol.2019.104432
Huang, J. S., Chen, L. G., Zhang, Y. Y., & Zhao, A. D. (2017). Research on the relationship between local government economic behavior and industrial land price under different industrial structure. Industrial Economics Research, 3, 81–90 (in Chinese). https://doi.org/10.13269/j.cnki.ier.2017.03.007
Hui, E. C. M., & Ho, V. S. M. (2003). Does the planning system affect housing prices? Theory and with evidence from Hong Kong. Habitat International, 27(3), 339–359. https://doi.org/10.1016/S0197-3975(02)00042-5
Jackson, T. O. (2002). Environmental contamination and industrial real estate prices. Journal of Real Estate Research, 23(1–2), 179–200. https://www.researchgate.net/publication/5142156https://www.researchgate.net/publication/5142156
Jin, X. B., Zhou, Y. K., Chang, C., & Xu, G. X. (2011). An evaluation on industrial land prices based on land marketization. Resources Science, 33(2), 302–307. http://en.cnki.com.cn/Article_en/CJFDTotal-ZRZY201102019.htm
Kaganova, O., Akmatov, A., & Undeland, C. (2008). Introducing more transparent and efficient land management in post‐socialist cities: lessons from Kyrgyzstan. International Journal of Strategic Property Management, 12(3), 161–181. https://doi.org/10.3846/1648-715X.2008.12.161-181
Kok, N., Monkkonen, P., & Quigley, J. M. (2014). Land use regulations and the value of land and housing: an intra-metropolitan analysis. Journal of Urban Economics, 81(1), 136–148. https://doi.org/10.1016/j.jue.2014.03.004
Kowalski, J. G., & Paraskevopoulos, C. C. (1990). The impact of location on urban industrial land prices. Journal of Urban Economics, 27(1), 16–24. https://doi.org/10.1016/0094-1190(90)90021-E
Li, C., Gao, X., He, B. J., Wu, J., & Wu, K. (2019a). Coupling coordination relationships between urban-industrial land use efficiency and accessibility of highway networks: evidence from Beijing-Tianjin-Hebei urban agglomeration, China. Sustainability, 11(5), 1446. https://doi.org/10.3390/su11051446
Li, C., Gao, X., Wu, J., & Wu, K. (2019b). Demand prediction and regulation zoning of urban-industrial land: evidence from Beijing-Tianjin-Hebei urban agglomeration, China. Environmental Monitoring and Assessment, 191(7), 412.
https://doi.org/10.1007/s10661-019-7547-4
Lin, S. W., & Ben, T. M. (2009). Impact of government and industrial agglomeration on industrial land prices: a Taiwanese case study. Habitat International, 33, 412–418.
https://doi.org/10.1016/j.habitatint.2009.01.001
Lockwood, L. J., & Rutherford, R. C. (1996). Determinants of industrial property value. Real Estate Economics, 24(2), 257– 272. https://doi.org/10.1111/1540-6229.00690
Ministry of Housing and Urban-Rural Development, P. R. China. (2017). China urban and rural construction statistical yearbook. China Planning Press.
National Bureau of Statistics of China. (2017). China statistical yearbook. China Statistics Press.
Peiser, R. B. (1987). The determinants of nonresidential urban land values. Journal of Urban Economics, 22(3), 340–360. https://doi.org/10.1016/0094-1190(87)90032-5
Peng, Y., & Liu, X. (2015). Bidding decision in land auction using prospect theory. International Journal of Strategic Property Management, 19(2), 186–205. https://doi.org/10.3846/1648715X.2015.1047914
Quigley, J. M., & Rosenthal, L. A. (2005). The effects of land use regulation on the price of housing: what do we know? What can we learn? Cityscape, 8(1), 69–137. http://urbanpolicy.berkeley.edu/pdf/QR2005.pdf
Rosen, S. (1974). Hedonic prices and implicit markets: product differentiation in pure competition. Journal of Political Economy, 82(1), 34–55. https://doi.org/10.1086/260169
Saz-Salazar, S. D., & Leandro, G. M. (2005). Public provision versus private provision of industrial land: a hedonic approach. Land Use Policy, 22(3), 215–223.
https://doi.org/10.1016/j.landusepol.2004.05.002
Shen, X., & Sun, X. (Eds.). (2012). Untying the land knot: making equitable, efficient, and sustainable use of industrial and commercial land. The World Bank. https://doi.org/10.1596/978-0-8213-8970-6
Sun, Y. F., Ma, A. B., Su, H. R., Su, S. L., Chen, F., Wang, W., & Weng, M. (2020). Does the establishment of development zones really improve industrial land use efficiency? Implications for China’s high-quality development policy. Land Use Policy, 90, 104265. https://doi.org/10.1016/j.landusepol.2019.104265
Thompson, B., & Tsolacos, T. (1999). Rent adjustments and forecasts in the industrial market. Journal of Real Estate Research, 17(2), 151–167.
Thompson, B., & Tsolacos, T. (2001). Industrial land values – a guide to future markets? Journal of Real Estate Research, 21(1–2), 55–76.
Tu, F., Ge, J. W., Zhong, Q., & Liu, D. X. (2017). Determinants of industrial land price in the process of land marketization reform in China. China Land Science, 31(12), 33–41.
Wang, H., Tao, R., Wang, L. L., & Su, F. B. (2010). Farmland preservation and land development rights trading in Zhejiang, China. Habitat International, 34(4), 454–463. https://doi.org/10.1016/j.habitatint.2009.12.004
Wang, J. T., Cao, Q. F., & Tian, S. Y. (2012). Industrial agglomeration, government intervention and industrial land prices: an empirical study on 35 Cities in China. China Land Science, 26(9), 12–20. https://doi.org/10.13708/j.cnki.cn11-2640.2012.09.008
White, H. (1980). A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity. Econometrica: Journal of the Econometric Society, 48(4), 817–838. https://www.jstor.com/stable/1912934
Wu, Y. Z., Zhang, X. L., Skitmore, M., Song, Y., & Hui, E. C. M. (2014). Industrial land price and its impact on urban growth: a Chinese case study. Land Use Policy, 36, 199–209. https://doi.org/10.1016/j.landusepol.2013.08.015
Wu, Y. Z. (2007). On regional equilibrium of industrial land price and management strategy based on game theory. Journal of Zhejiang University (Humanities and Social Sciences), 37(4), 124–133. http://en.cnki.com.cn/Article_en/CJFDTotal-ZJDX200704018.htm
Zhang, X. L., Lin, Y. L., Wu, Y. Z., & Skitmore, M. (2017). Industrial land price between China’s Pearl River Delta and Southeast Asian regions: competition or coopetition? Land Use Policy, 61, 575–586. https://doi.org/10.1016/j.landusepol.2016.12.011
Zhao, S., & Xiao, X. J. (2012). Analysis on the land price factors in the context of macro-level framework. China Land Science, 26(9), 4–12. https://doi.org/10.13708/j.cnki.cn11-2640.2012.09.007
Zhou, L. A. (2007). Governing China’ s local officials: an analysis of promotion tournament model. Economic Research Journal, 7(36), 36–50. http://en.cnki.com.cn/Article_en/CJFDTotal-JJYJ200707006.htm