LAND MARKETS AND PLANNING

land markets and planning



Land markets and planning

Introduction

Historically, the development of urban areas was such that the intensity of land use was much greater at the urban core, generally referred to as the central business district (CBD) and diminished as distance from the CBD increased. The urban land market is the mechanism by which land is allocated to the competing residential and business users. Residential and business users establish their willingness to bid for a certain location based on the location's value in terms of utility for residents or profit for business. Competition in the land market would allocate space to the highest bidder.

The origin of the land allocation process was the theory of land use developed. The contribution was to consider the competition for land use among users, who valued proximity to a central location, and they developed the concept of the land rent function, whereby agricultural land users who desired to minimize the costs of producing and transporting their outputs to the market would bid for locations in close proximity to the market. Bids would decline for sites farther from the market centre to account for the increase in transportation costs. A land rent existed based on the value that users place on the scarce locations surrounding the desired central location for all this you need planning.

Discussion

The modern version of the land allocation process is generally labelled. Alonso (1964), Muth (1969), and Mills (1967) formally developed the theory of spatial equilibrium in the land market. The Alonso-Muth-Mills approach considers a competitive urban land market in which the demand for urban land is based on the utility-maximizing decisions of households and the profit-maximizing decisions of firms in a mono-centric city. Firms value CBD locations since the CBD contains the transport node where firms export their products.

A CBD location would reduce the cost of transporting products to the export node. For households, the CBD is the location of employment, and household's value proximity to the CBD to reduce commuting costs. The value that firms and households place on proximity to the CBD defines their bid-rent function, which is the willingness of a user to pay for a location at a particular location from the CBD.

The study of land and land market has encompassed various disciplines ranging from economics and finance to planning, real estate and geography. The multiplicity of approaches which characteristics the literature on land market is a consequence not only of the range of disciplines but also that of variety of concepts and methods used to analyze specific problems, The concept used, however, have not always been discipline specific. Thus e.g., land being used in different disciplines. The various disciplines, however, have shown preference for a particular concept of land over its other concepts. Thus, in economics, the concept of land as a factor of production has been more as property or an investment good than anything else. In planning and geography on the other hand the concept of land as situs or ...