Measuring the Outcomes of Anticommons in Land Development Tzuchin Lin, Fanghsin Huang Department of Land Economics National Chengchi University Taipei, TAIWAN European Real Estate Society 21 st Annual Conference Bucharest, Romania June 2014 -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 Outlines 2 The Inert Housing (Land) Supply is Overlooked 3 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? 4 Number and Areas of Privately-owned Land Parcels Taipei City 5 Number and Areas of Privately-owned Land Parcels by Districts 6 Land Assembly likely Leads to The Anticommons Tragedy Takatoshi Tabuchi (1996), Peter Colwell and Henry Munneke (1999), Tzuchin Lin and Alan Evans (2000) Total Price Area 2V(A) V(2A) V(A) 2AA 7 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. 8 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 Jieming Zhu (2012) -owners strategy of holding land out of market nicely exemplifies the possible tragedy of the anticommon 9 Wanhua District needs to be Revitalized 10 11 12 Plan Area: 39.5 hectares Developable Area: 23 hectares 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 Article 193 of Regulation of Land Cadastre Surveying: The owner of abutting plots with similar land use can apply to have them merged into a single plot under sole ownership The Size of Developed Parcels is Larger than Undeveloped Parcels 14 15 16 Land Parcels have been slowly but Persisently Assembled YearGiniYearGiniYearGini 18 19 Gini Coefficient - 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) 20 -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 m 2, 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 21 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 Wrestling between Urban Development and Property Rights is Inevitable 22 Thank your for listening! 23 24 25 26 27 5-storey building 28