Land Use 4 Types of land use l

Land Use 4

Types of land use l Commercial l Residential l Public l Waiting

Supply of Land in Shot run l Fixed. l Demand determine land price. l Price determine how land is allocated among users

Land is an asset l Earns return over many years. l Capitalized or present value of land yeild fixed return. PV= A/I

Urban Land Use Models l Concentric zones l Radial – sector l Multiple-nuclei

Concentric zones l A city expands from the center in the form of Concentric. l Five successive zones around the CBD. l 1 st zone: wholesaling area. l 2 nd zone: mixed of slum housing and scattered business. l 3 rd zone: low and middle-income residence. l 4 th zone: upper-income single family. l 5 th zone: high –income suburban commuters. CBD 1 2 3 4 5

Bid Price Curve and Concentric Zones l As CBD grows outwards there is a pressure on each successive zone to expand. R 1 l l Thus a successive of land use overtime. Housing will “filter down” from higher- to lower income families. Rent R 2 R 3 R 4 R 5 Distance

How can families in Zone 2 outbid high income families? l Speculators hold the land in Zone 2 in its present use waiting for huge capital gain when the land transformed to higher use. l During this waiting period , there is little if any incentive for speculators to keep up the structure on the land ; thus rents or the price paid for land services for a given year will be low enough for low income families. l Higher – income persons have stronger preference for the size of the parcel of land they buy than for distance

Redial Sector l l l Explain residential landuse development. According to the model a circular city is composed of sectors of similar types of land use radiating from the center. Four types of land uses around the CBD: A &B devoted for business and light manufacturing C&D refer to low-middle and higher income residential area C D A C CBD B C D

Determinant of Land use in Redial sector model l l Rent bid: Agglomeration forces will attract firms; thus allowing them to bid higher rent for land in sector A&B. Similarly, good transportation routs to the city center will attract residence who can offer higher rents, since their commuting cost will decline the closer they locate near the highway. Topographical condition: Houses can be built on hillside more easily than shopping centers.

Multiple Nuclei l Shortcoming of the previous two models is their assumption of single CBD. l Even cities having single centers have numerous subcenters. l Why subcenters originate Subcenters based on: Central-place activities (shopping center). Transport nodes or terminal. Major agglomerations (sport stadium, or university). Former small town. Natural advantage of the site. Once a given subcenter exist, concentric zone and/or radial sector may emanate from its center in various pattern. l l l

The Determinants of Specific Land Use l How a specific parcel of land will be used? l The market is a point of contact between real-estate owner and person who desire to buy, rent, or lease property for their residences or businesses. l If the prospective user is business, its demand price will be determined by: 1. characteristics of business. 2. characteristics of site. 3. The location of the site with respect to competitors, or complementary establishment. l l l

l 1. preference. l 2. Income. l 3. The neighborhood characteristics of the perspective site. Rent The deterarminant demand price for residents PL U 1 U 2 Distance U 3

Commercial land Use l Profit – maximizing firm will buy land up to the point where: MR = MC Marginal revenue Product = MP. P Revenue l SL= PL MRPL Unit of Land

Rent – bid Curve l Bid curve is steeper when: l Advertisement cost is high. l Greater productivity of land. l Land non land are poor substitute.

Land Use Policy l Efficient allocation of resources is reached when Mr(P) = MC l If P grater than MC society is saying it desire more.

Tools of Land Use Policy l Zoning. l Fire and safety ordinance. l Urban Renewal.

Zoning l l Zoning: certain geographical areas constrained in the type and number of structures that can be placed on the land. It freezes the use of land in the short term. There is an economic rational for zoning. It consider social cost (negative externalities), so MC > P.

Urban Renewal. Rent/acre l To eliminate blight and slums. This involve changes in land use. High Income Low Income Rent/acre l Middle Income High Income Distance Rent bid by income Low Income Middle Income Distance Impact of urban renewal on land use