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ABC of land development – Michael Edwards

from MICHAEL EDWARDS: Agents in urban development: frameworks for analysis

Land ownership; promotion (= development)

Historically the ownership of land has been an enormous problem for the development of capitalist economies – often presenting great barriers to modernisation, inhibiting investment, using local monopoly powers to suck out of local economies income which could otherwise have been used for productive investment. Sometimes the mere structure of ownership (small plots, complicated tenure) could prevent owners from developing easily, even when they wanted to. Occasionally there have been cases where forms of large-scale private land ownership have enormously simplified and helped development but the general rule is that landownership is a barrier.

In modern Europe we have seen changes which – to very varying degrees – have removed some of these barriers, usually by giving the state powers to acquire land and to service it for development, or to reparcel sites, or to acquire land if the existing owners do not develop it in the way (and at the time) required by some plan. The Netherlands and Spain seem to be rather advanced in this process, Britain rather behind.

While the land ownership system may vary from country to country, there is always some development or promotion function involved in any urban project. This may be a very simple function – as where a municipality builds its own school or a manufacturing firm builds its own factory extension.

But it can be quite a demanding and complex function, potentially including:

• conceiving of the possibility;

• finding a location;

• market research (for speculative projects) or consultations with future users, and feasibility studies;

• specifying the product, commissioning designers;

• obtaining permissions;

• finding investors, credit, state subsidies;

• contracting with, and controlling, builders;

• marketing the finished product in advance;

and often doing all these things fast – to minimise interest charges or (if the project is speculative) to catch what is thought to be a good price in the market.

[The agents which perform these functions vary enormously. Some industrial firms do it for themselves. Some banks and insurance companies have their own development divisions. Sometimes there are integrated firms which combine construction, promotion (and often finance too) as in France and Japan for example. Sometimes promoters become also property investment companies, holding on to their completed projects and becoming large scale managers as well as producers. And then there are the pure promoters – often very small firms with few staff and little capital – who specialise completely in getting projects together, completing them, selling and going on to the next. This could be the small speculator who builds one house a year or a large-scale operator like some development companies in the UK.]

Remember too that promoters / developers may be the same organisations as land owners or may be quite distinct and this may have profound effects on what gets built and on the flows of money and risk involved.

Perhaps the most important distinction to make here is between development which is speculative or not: speculative production is where, at the time when construction starts, there is no particular user of the building contracted to use it.

In some places speculative development is the dominant form; in others most building is done by or for clearly-identified users. This distinction often corresponds with the distiction between owner-occupation and renting of finished buildings discussed below under “use”.

But it is potentially a very important distinction for the location and for the design of buildings because speculative developers will tend to produce buildings of the type and location which they think will sell. They may be wrong so some buildings are under-used while people seeking buildings in some types and places may not get them. Also they may tend (with a few brave exceptions) to play safe – to congregate on the types, designs and locations for which they think there will be a steady mass of demand. In this case marginal locations will be under-supplied and unusual kinds of building will not be built.



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