Measuring the Stringency of Land Use Regulation: The Case of China's Building Height Limits

Abstract

This paper develops a new approach for measuring the stringency of a major form of land-use regulation, building-height restrictions, and it applies the method to an extraordinary dataset of land-lease transactions from China. Our theory shows that the elasticity of land price with respect to the floor-area ratio (FAR), an indicator of the allowed building height for the parcel, is a measure of the regulation's stringency (the extent to which FAR is kept below the free-market level). Using a national sample, estimation that allows this elasticity to be city-specific shows substantial variation in the stringency of FAR regulation across Chinese cities, and additional evidence suggests that stringency depends on certain city characteristics in a predictable fashion. Singlecity estimation for the large Beijing subsample, where site characteristics can be added to the regression, indicates that the stringency of FAR regulation varies with certain site characteristics, again in a predictable way (being high near the Tiananmen historical sites). Further results using a different dataset show that FAR limits in Beijing are adjusted in response to demand forces created by new subway stops.

Stringency of land-use regulation: Building heights in US cities

“…1 The second approach, which is applied in the present paper, exploits the relationship between the value of vacant land and the extent of a particular regulation to gauge the regulation's stringency. The approach, which was developed by Brueckner, Fu, Gu and Zhang (2017) in the context of building-height regulation, relies on the intuitive proposition that relaxing a stringent regulation raises land value per square foot by more than relaxing a less-stringent one (with changes measured in percentage terms). Since building-height regulation constrains development options, thereby reducing the developer's willingness-to-pay for the land, it follows that relaxation of a stringent height constraint will raise WTP by more than relaxation of a mild constraint, a conclusion that is established formally in section 2.…”

“…Thus, to identify stringency, the log of land value per square foot is regressed on the log of the regulated building height and other covariates, and the resulting height coefficient (which is an elasticity) constitutes the stringency measure. Using extensive data on leasing (effectively sales) of vacant land in China, Brueckner et al (2017), used their regression results to compare the stringency of height regulations across Chinese cities by allowing city-specific elasticities.…”

“…As in Brueckner et al (2017), the focus is on regulations that limit a building's floor-area ratio (FAR), which equals the ratio of total square footage of floor space in the building to the area of the lot, effectively capturing building height. 2 Land-value information comes from data on vacant land sales available from the CoStar Group's commercial real estate website, and digital zoning maps are used to assign an FAR value for each sale transaction.…”

Impact of Municipal Political Decision Makers’ Turnover on the Degree of Building and Land Use in China: an Empirical Study Based on the Profi les of the Secretaries of Municipal Party Committees

“…First, it has been examined by the short panel data using the Hausman testing approach, and to observe whether it matches the fi xed-eff ect model or the mixed-regression model. The results of model (1), model (2) and model (3) in the Hausman test simultaneously reject the hypothesis respectively, which requires us to adopt a fi xed-eff ect model for examining these three models. Table 3 shows the regression result of the model (1), and the result indicates a positive and signifi cant correlation between the SMPCs holding power by the same-ranking lateral transferring or the same-ranking vertical dispatch in the municipality and the increase of relevant fl oor area, revealing that the SMPCs holding power by the same-ranking lateral transferring or same-ranking vertical dispatch were more inclined to promote the urban land-use and development intensity because they prefer to inherit the experience gained from their original prefectures.…”

“…The rapid urbanisation in China has had profound eff ects on the nation's economy, society and the environment in the past 30 years; however, it is still a controversial academic issue to discuss the driving forces embedded in both the endogenesis and the exogenesis. For decades, studies have investigated the measurement standards and the calculation methods of the fl oor area ratio (FAR) (Zou, 1994;Brueckner et al, 2017), primarily, focusing on the impacts of the rapid growth and the transfer modes of the FAR on land prices, housing prices, accessibility to transportation, human sett lement and so on (Chen, 2005;Zhang and He, 2009; Bao and Li, 2010; Qin and Sun, 2010; Jiang et al, 2014; Zhao, Liu and Long, 2014). On the other hand, the market cannot adjust the FAR on its own (Yang, 2009).…”