What Motivates Speculators to Speculate?

Abstract

Land speculation that occurs on the urban border can be very problematic to the healthy development of cities—critical to economic growth. Speculative land investors, concerned with profits from trading in landed property, can especially affect developing countries where regulation is often poorly controlled and overly bureaucratic. An investigation into the factors motivating land speculators operating in the urban fringe of the city of Shashemene, Ethiopia is examined. The paper, in addition to contributing to the literature, is the second-known attempt and extension of the authors’ pilot research to study the behavior of land speculators in the urban fringe of a growing Ethiopian city. A theoretical framework and conceptual breakdown are put together with historical reference to early land speculation examples. Two questionnaires were separately administered with a representative random sample of 159 members from the local land developer association (i.e., investors) and 24 senior officials from the study area. A principal component analysis categorized the most significant dynamics in controlling land speculation procurements. Results indicated motivational reasoning as the prime cause for speculative activities. Evidence indicated that land speculation is a critical dynamic for self-worth especially with business-oriented persons. Entropy, the disorder of the communicative data, suggests a possible rethinking of the way government should intervene in the urban property market. As such, developmental smart cities in Ethiopia must thoroughly consider the dynamisms of speculative activities and its effects on local housing as it moves forward–in the 2020s.

Farmers’ Intentions to Lease Forestland: Evidence from Rural China

“…Though forestland markets are still underdeveloped, forest plantation farm households have started to rent in forestland from familiar local farmers with government support via cost-sharing in Vietnam [32]. As such, governmental support has promoted development of forestland markets in Uganda [33] and Ethiopia [34,35]; however, land speculation is active in both countries and requires further procurement controls. In Romania, large areas of forestland have shifted from public to private ownership [36], promoting forestland market competition [37,38].…”

Complexity in Economic and Social Systems

“…Complex phenomena occurring on the interface between economical activity and spatial structure are the subject of a study of land speculation on the outskirts of a sample city in Ethiopia [24]. This study investigates motivations the speculators are driven by and concludes on a possible direction local governments should proceed in order to diminish negative impact of such practices on city development.…”

Urbanization and urban land use efficiency in Ethiopia : remote sensing and institutional-based analysis

“…Besides, according to Mengistu & van Dijk (2018), transferring lease rights (subleasing) before developing the land is one of the reasons negatively affecting land use efficiency in Ethiopia. Because of gaps in enforcement, speculators fence plots for years (Gemeda et al, 2020;Plummer, 2012). This emanates mainly from weak follow-up and/or lack of commitment to ensure urban land user rights holders use the land for intended purposes than hoarding it.…”

“…Yet in many parts of the world, a significant part of urban land has not been used efficiently. In some countries, because of fencing and land hoarding, large tracts of urban land remained unproductive (Dadi et al, 2016;Du and Peiser, 2014;Gemeda et al, 2020;Koroso et al, 2020;Steel et al, 2020;Zhang et al, 2015). Therefore, efficient use of urban land is required to address issues related to fast urbanization, industrialization, speculation, farmland protection, etc.…”

“…In practice, however, the 2011 Urban Lands Lease Holding Proclamation appears to do very little to improve urban land utilization (Kassa, 2015;Mohamed et al, 2020). Some sections of the new policy have been largely ignored by actors (Gemeda et al, 2020). As a result, the policy did very little to tackle practices such as land hoarding, urban sprawl, informal settlements and illegal land capture (Gemeda et al, 2020;Koroso et al, 2021).…”