Abstract:The main purpose of this article is to identify the motives of investing in land and arable land and determine the choices of such investment. The empirical research, based on the method of expert evaluation, fills the gap of the investment in land observed in scientific literature. The expert evaluation has allowed to develop a profile of a land investor, identify the determinants of the value of land and arable land and clarify the motives of investing in land in a small open economy (the trends in one small… Show more
“…So, the local governments are taken as land sellers capturing short-term profit on land market. It is important for investors, understanding the behaviors of China's local governments on the land market, to draw up their business strategies and inform their own competitive positions within the real estate industry (Liu et al, 2018a;Remeikienė et al, 2019).…”
Land value appreciation in the urbanization process has triggered market speculation. The Land Bank System strengthens local governments’
ability to control land supply and distribution rights. Local governments are considered close stakeholders. Under the pressure of guaranteeing economic growth
and promotion, local governments have increased their dependence on land finances. It is important for investors to understand the local governments’ behaviors,
and draw up business strategies. This study aims to examine the influencing factors and formation mechanism of local government land hoarding. The research
hypothesis was tested by collating provincial-level panel data of China from 2004 to 2015 and using dynamic panel data estimated by the Generalized Method of
Moments (GMM). A significant positive correlation was found between residential land price and land hoarding area by local governments. Land speculation in the
eastern region is also more pronounced than that in central and western regions. In addition, empirical studies have found a correlation between the degree of
government intervention and local government land hoarding behavior. The higher the degree of government intervention, the less land sold through bid invitation,
auction, and listing, which are linked to the corresponding hoarding land area.
“…So, the local governments are taken as land sellers capturing short-term profit on land market. It is important for investors, understanding the behaviors of China's local governments on the land market, to draw up their business strategies and inform their own competitive positions within the real estate industry (Liu et al, 2018a;Remeikienė et al, 2019).…”
Land value appreciation in the urbanization process has triggered market speculation. The Land Bank System strengthens local governments’
ability to control land supply and distribution rights. Local governments are considered close stakeholders. Under the pressure of guaranteeing economic growth
and promotion, local governments have increased their dependence on land finances. It is important for investors to understand the local governments’ behaviors,
and draw up business strategies. This study aims to examine the influencing factors and formation mechanism of local government land hoarding. The research
hypothesis was tested by collating provincial-level panel data of China from 2004 to 2015 and using dynamic panel data estimated by the Generalized Method of
Moments (GMM). A significant positive correlation was found between residential land price and land hoarding area by local governments. Land speculation in the
eastern region is also more pronounced than that in central and western regions. In addition, empirical studies have found a correlation between the degree of
government intervention and local government land hoarding behavior. The higher the degree of government intervention, the less land sold through bid invitation,
auction, and listing, which are linked to the corresponding hoarding land area.
The value of a property comprises the value of both the building and the land. Numerous studies have reported a nonlinear relationship between house age and housing prices, which may result from mispricing the value of the land. The paper establishes a theoretical model to evaluate the optimal time for land redevelopment and the land value after redevelopment according to the real options. Although the depreciation effect causes the value of buildings to decrease as house age increases, properties with a lower residual building value have a higher probability of being redeveloped. Thus, the depreciation effect of building value and the inverse depreciation effect of land value contribute to the nonlinear relationship between house age and housing prices. Data from Taipei City, Taiwan, are employed for empirical analysis. The results imply that where land is scarce, housing prices are unlikely to depreciate due to ageing buildings.
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