U r b a n L a n d. Economics. J a c k H a r v e y & E r n i e J o w s e y

Transcription

1 U r b a n L a n d Economics J a c k H a r v e y & E r n i e J o w s e y S i x t h E d i t i o n

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3 URBAN L A N D ECONOMICS

4 By Jack Harvey BASIC ECONOMICS BASIC ECONOMICS WORKBOOK ELEMENTARY ECONOMICS WORKBOOK FOR ELEMENTARY ECONOMICS INTERMEDIATE ECONOMICS MULTIPLE CHOICE QUESTIONS FOR INTERMEDIATE ECONOMICS THE BRITISH CONSTITUTION ( 7 7/i L. Bather) HOW BRITAIN IS GOVERNED WORKBOOK FOR HOW BRITAIN IS GOVERNED PRODUCING AND SPENDING {with M. Harvey) MODERN ECONOMICS MODERN ECONOMICS STUDENT S NOTEBOOK MODERN ECONOMICS: STUDY GUIDE AND WORKBOOK {with M. K. Johnson) INTRODUCTION TO MACRO-ECONOMICS (with M. K. Johnson) INTRODUCTION TO MACRO-ECONOMICS: A WORKBOOK (with M. K. Johnson) GOVERNMENT AND PEOPLE {with M. Harvey) THE ORGANISATION IN ITS ENVIRONMENT THE ORGANISATION IN ITS ENVIRONMENT: ASSIGNMENTS FOR BEC COURSES (with J. Chilver) MASTERING ECONOMICS ECONOMICS REVISION GUIDE By Ernie Jowsev!. ', {, 100 ESSAY PLANS FOR ECONOMICS

5 U R B A N L A N D E C O N O M I C S Sixth Edition Jack Harvey B.Sc. (Econ.J. Dip. Ed. (Oxford) and Ernie Jowsey B.A. (Eton) M.A. PGCE p a l g r a v e m a c m i l l a n

6 Jack Harvey 1981, 1987, 1992, 1996, 2000 Jack Harvey and Ernie Jowsey 2004 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 0LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act First edition (published as The Economics of Real Property) 1981 Reprinted 1985, 1986 Second edition (published as Urban Land Economics) 1987 Reprinted 1988, 1989, 1990 Third edition 1992 Reprinted 1993, 1994 Fourth edition 1996 Reprinted 1997, 1998 Fifth edition 2000 Reprinted 2001 Sixth edition 2004 Published by PALCRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RC21 6XS and 175 Fifth Avenue, New York, N.Y Companies and representative throughout the world PALCRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin's Press, LLC and of Palgrave Macmillan Ltd. Macmillan is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN-13: ISBN-10: This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin A catalogue record for this book is available from the British Library Printed and bound in China

7 I am the basis of all wealth, the heritage of the wise, the thrifty and prudent. I am the poor man's joy and comfort, the rich man's prize, the right hand of capital, the silent partner of many thousands of successful men. I am the solace of the widow, the comfort of old age, the cornerstone of security against misfortune and want. I am handed down to children, through generations, as a thing of greatest worth. I am the choicest fruit of toil. Credit respects me. Yet I am humble. I stand before every man, bidding him know me for what I am and possess me. I grow and increase in value through countless days. Though I seem dormant, my worth increases, never failing, never ceasing, time is my aid and population heaps up my gain. Fire and the elements I defy, for they cannot destroy me. My possessors learn to believe in me; invariably they become envied. While all things wither and decay, I survive. The centuries find me younger, increasing with strength. The thriftless speak ill of me. The charlatans of finance attack me. I am trustworthy. I am sound. Unfailingly I triumph and detractors are disproved. Minerals and oils come from me. I am producer of food, the basis for ships and factories, the foundation of banks. Yet I am so common that thousands, unthinking and unknowingly, pass by me. I am land. Lou Scott, What is Real Estate 9

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9 C o n t e n t s P r e f a c e to the S i x t h Edition xii A c k n o w l e d g e m e n t s x j v PART I WELFARE AND ECONOMIC EFFICIENCY 1 Economic Efficiency through the Price System W e l f a r e a n d economic efficiency C o n d i t i o n s necessary for Pareto optimality A c h i e v i n g the conditions o f economic efficiency C o n d i t i o n s necessary for economic efficiency t h r o u g h the price system 12 PART II REAL PROPERTY 2 Characteristics of the Real Property Market Is there a real property market? T h e efficiency o f the real property market 24 3 Functions of the Real Property Market Dealings in real property interests Functions o f the real property market 31 4 The Pricing of Land and Land Resources L a n d as a w h o l e T h e c o m m e r c i a l rent o f land T h e pricing o f land resources T h e d o m i n a n c e o f stocks over flows 46 5 Investment in Real Property Special investment characteristics o f different interests in real property Investors in real property 59 vii

10 viii Contents PART III DEVELOPMENT 5.3 The overall level of yield on investment assets in general ^2 5.4 The pattern of yields on different assets with particular reference to property assets Asset yields over time: an empirical study The effect on the real property market of the demand for land resources as an investment 74 6 The Development Process The nature of development Problems of the developer Choosing between capital projects Estimating demand Optimum construction outlay The intensity of site use The amount which can be paid for the site The choice of development project The Timing and Rate of Redevelopment The timing of redevelopment The rate of redevelopment Finance for Development General considerations Short-term finance Longer-term development finance Long-term investment finance The Impact of Finance on the Commercial Property Market The property market in the 1950s and 1960s The collapse of the property market 1973^ The property collapse Lessons which need to be taken on board from the two collapses Repercussions of the property collapse The commercial property scene in Comprehensive Redevelopment The nature of comprehensive redevelopment Comprehensive redevelopment by private enterprise Redevelopment by the local authority Partnership arrangements between local authorities and private developers 148