Erwin van der Krabben

A Theoretical Framework for the Functioning of the Dutch Property Market

In this article a theoretical framework will be presented to aid understanding of the functioning of property markets, more particularly the Dutch property market. It will be argued that traditional urban economic theories are not able to explain the structure and processes of the built environment. In the Dutch case, we are confronted with two problems; first, to find a way in which urban economic theories, designed for a context of cities in Great Britain and the US, can be used to explain urban development that takes place in the different context of Dutch cities; and, secondly, to formulate a set of hypotheses appropriate for the Dutch property market. The hypotheses concern the strategies of individual actors on the property market and the underlying factors. It is concluded that, in general, the relation between institutional structure and property development has been neglected both because of insufficient attention from economic scientists, and because empirical research is very complicated.

Retail Development in The Netherlands: Evaluating the Effects of Radical Changes in Planning Policy

After long years of a protective national retail planning policy, the Dutch national government decided in 2004 on a radical shift with respect to this policy, by abolishing restrictive retail regulations. The provinces have recently responded by reinstalling the main elements of the national retail planning model at the regional level. This article shows that nevertheless unintended structural changes in the Dutch retail landscape have occurred. Building on theoretical perspectives on institutional change and normative approaches to planning, the article evaluates the rationale behind the shifts in the planning regime and the extent to which the “new” planning regime meets the conditions for a collaborative planning approach. Additionally, regional differences in the effectiveness of retail planning are analysed and related to regional differences in the planning regime.After long years of a protective national retail planning policy, the Dutch national government decided in 2004 on a radical shift with respect to this policy, by abolishing restrictive retail regulations. The provinces have recently responded by reinstalling the main elements of the national retail planning model at the regional level. This article shows that nevertheless unintended structural changes in the Dutch retail landscape have occurred. Building on theoretical perspectives on institutional change and normative approaches to planning, the article evaluates the rationale behind the shifts in the planning regime and the extent to which the “new” planning regime meets the conditions for a collaborative planning approach. Additionally, regional differences in the effectiveness of retail planning are analysed and related to regional differences in the planning regime.

Industrial Land and Property Markets: Market Processes, Market Institutions and Market Outcomes: The Dutch Case

Outcomes of land and property markets may be understood by studying the effects of (interventions in) market processes and market institutions. Many studies have paid attention to the meaning of institutions for land and property development processes. The standpoint of this paper is that changes in the institutional order of the market may be considered to arrive at more desirable market outcomes. It will be argued that institutional economic theory offers a valuable theoretical approach to bring forward possible interventions in this institutional order. This theoretical approach to land and property development processes is applied to analyse one specific market outcome, the spatial layout of industrial parks in the Netherlands. Starting from the analysis of the oversupply of industrial land and the deterioration of existing industrial parks, the paper focuses on possible interventions to change the institutional order that should lead to more favourable market outcomes. For the present submarket for industrial land (building plots), a number of interventions are discussed to internalize the externalities that occur in this market and to increase the number of suppliers. Additional interventions are proposed to create a “new” submarket for new leasehold industrial property, which is almost absent in the case of industrial estates.

Bridging the financial gap in climate adaptation: Dutch planning and land development through a new institutional lens

Based on a case study of the Stadshaven port redevelopment in Rotterdam, this paper explores whether existing spatial planning mechanisms and processes can be used to facilitate local-level investment in climate-resilient public infrastructure and/or whether new processes and mechanisms are required to encourage investment in climate adaptation. The study reveals several key findings. First, a lack of conventional funding sources or formalised regulatory framework allowed room for experimentation with existing mechanisms and flexible strategies. Second, project planners are currently ambivalent towards introducing new mechanisms as a means to overcome implementation challenges. The case provides evidence about the role of the governance process, not simply as a means of system coordination that exists in isolation from institutional norms and values, but rather as a space for innovation, which can contribute towards reducing the financial gap associated with climate adaptation.

A Property Rights Approach to Externality Problems: Planning Based on Compensation Rules

Most European countries have implemented some kind of land use planning based on exclusionary zoning principles to achieve spatial goals. This paper argues that, to reduce externality problems, regulatory planning is not always the best planning solution. Therefore, an alternative planning approach, which makes use of compensation rules, is suggested in this paper. This compensatory planning approach is based on property rights theory and refers to recent applications of this theory to planning practice. To illustrate the usefulness of such an approach, it is applied to the planning of out-of-town retail development in The Netherlands. The paper aims to demonstrate how deficiencies in the property rights regime can be repaired to deal with externality problems, achieving a more socially acceptable outcome of out-of-town retail development. The paper concludes with a discussion of the value of spontaneous order solutions for planning practice, by introducing four pragmatic rules on how to choose between different types of government interventions.Most European countries have implemented some kind of land use planning based on exclusionary zoning principles to achieve spatial goals. This paper argues that, to reduce externality problems, regulatory planning is not always the best planning solution. Therefore, an alternative planning approach, which makes use of compensation rules, is suggested in this paper. This compensatory planning approach is based on property rights theory and refers to recent applications of this theory to planning practice. To illustrate the usefulness of such an approach, it is applied to the planning of out-of-town retail development in The Netherlands. The paper aims to demonstrate how deficiencies in the property rights regime can be repaired to deal with externality problems, achieving a more socially acceptable outcome of out-of-town retail development. The paper concludes with a discussion of the value of spontaneous order solutions for planning practice, by introducing four pragmatic rules on how to choose between different types of government interventions.

Risk management in public land development projects: Comparative case study in Finland, and the Netherlands

Public land development is an approach where the public authority acquires land for development, services the land with public infrastructure, and transfers the serviced building plots to private building developers or self-developing end-users. Motivations to use public land development can be divided to planning goal related motivations and financial motivations. In this paper, we study management of public risks related to the use of public land development by analysing case studies located in Finland and the Netherlands, countries known to have strong tradition in public land development. Our findings indicate that, whereas public land development has efficiencies in managing the risks related to the achievement of public planning goals, the management of the financial risks related to the public land development approach can be remarkably difficult even in countries with wide experience in public land development.

Understanding industrial land supply: how Dutch municipalities make decisions about supplying serviced building land

The supply side of real estate markets has remained relatively neglected compared to the body of work that studies the demand side. Consequently, little is known about the way that suppliers actually make decisions about the quantity of land and property to be made available for sale at any one time. This paper investigates how one particular type of suppliers, public developers of serviced industrial building land in the Netherlands, assess market conditions, and the way these analyses influence decisions to make more serviced building land available. This paper presents evidence from interviews amongst municipal developers and finds that profit considerations are not the main motive behind their decisions to develop industrial land. Municipalities are involved in land development primarily because they want to be able to steer local economic development. Furthermore, they also pay attention to ‘nonprice’ signals of market conditions – sales levels in particular – when deciding to make more land available for sale. However, we should be cautious with interpreting these results since this study only addresses public agencies, which might operate with ‘soft budget constraints’ and might have alternative preference functions than commercial developers.

A hedonic price analysis of the value of industrial sites

Hedonic price modelling is a widely used technique to explain the value of different types of individual property. Following the notion that areas within the city can suffer from devaluation, the question arises what factors influence the value of urban areas. In this paper, we use hedonic price analysis to answer this question for a specific type of urban area, the industrial site. We use the average property value per hectare as a representation of the value of an industrial site. A distinction is made between three types of explanatory variables: physical characteristics of the industrial site, regional economic characteristics and general economic trends. Although the overall explanatory value of our model appears to be modest compared to existing hedonic pricing studies of individual property, results show that most explanatory variables in our model have the expected coefficients and signs, indicating that this method can be applied in a meaningful way to gain insight into the valuation of urban areas.

How to Define the Optimal Level of Public-sector Infrastructure Development? A Conceptual Model for Decision-making in Infrastructure Projects

Abstract Debates with respect to financial problems of public-sector infrastructure development increasingly focus on ways to improve value capturing. Two issues play a crucial role in this debate: how much value can be captured and how can we maximize the value to be captured? In this paper a conceptual model is presented that enables defining the optimal level of public sector infrastructure development—combining a social and financial perspective. Using the model, it is possible, in principle, to define the maximum level of value capturing. Additionally, the paper provides empirical evidence of the potentials of value capturing in three Dutch case studies. The case studies show that the potential value to be captured as a result of investments in rail infrastructure is substantial, but also that it is unknown whether value capturing would be higher in case of alternative investment levels. It will be argued that the conceptual model might be useful to define the optimal level of investment in accessibility in each case study.

Negotiation processes in land and property development: an experimental study

Negotiations have always played an important role in urban planning and in land and property development processes. Numerous case study-based researches have been done to demonstrate the significance of negotiation to resolve the divergent interests of stakeholders. In this article, an alternative methodological perspective is applied by analysing the negotiation as a more generic mechanism through a role-playing face-to-face negotiation experiment with experts in the field that resembles – to a certain extent – real-life negotiation processes. A number of important aspects of the outcomes were analysed to get useful insights into stakeholders’ behaviour in the negotiation processes where the negotiation takes place voluntarily and spontaneously. It is shown in this study that within the setting of the experiment, the stakeholders can still be expected to be concerned about the equality of outcome. Moreover, it also confirms that the information availability, especially regarding the financial conditions under which the developments take place, plays an important role in defining the success of the negotiations. Finally, based on the experiment, it is possible to define the urban planning equilibrium satisfying all stakeholders in the negotiation process.