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The Impact of Economic Transformation and the Credibility of Planning Control on Agricultural Land Values

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  • Khalid, Haniza
  • Lloyd, Timothy Adrian
  • Morgan, Christopher Wyn

Abstract

This paper develops a hedonic model of agricultural land prices to investigate the efficacy of planning controls, whose raison d’être is to regulate the conversion of farmland. While development (commercial, industrial and residential) potential of farmland affects agricultural land values in all countries, its impact is potentially more acute in Newly Industrialised Countries where development pressure is strong and planning law is often weakly enforced. In the Malaysian land market, which epitomises this situation, State Authorities have approved a large number of applications to convert land from agriculture to development, such that the market is inclined to behave as if planning control lacks credibility. To investigate the influence of 'development potential' on land legally designated as agricultural in Malaysia, an extensive dataset of over 2,000 land sales has been assembled. Using this database we attempt to estimate the effect – the development rent – on land price, which turns out to be high, exceeding 400% of agricultural value in some cases. From there, we draw some conclusions regarding the efficacy of existing planning controls and the implications of such a high premium. Der Beitrag untersucht, wie sich Bodenpreise und Landnutzungsentscheidungen im wirtschaftlichen Entwicklungsprozess verändern. Das nichtlandwirtschaftliche Nutzungspotenzial von Agrarflächen für Gewerbe, Industrie- und Wohnzwecke beeinflusst den Kaufpreis von Boden allerorten. Dieser Einfluss ist besonders ausgeprägt in Entwicklungsländern, in denen einerseits der Druck zu Flächenumwidmungen ausgeprägt ist und andererseits Instrumente zur Planung und Regulierung von Nutzungswechseln landwirtschaftlicher Flächen fehlen oder nicht konsequent durchgesetzt werden. Am Beispiel von Malaysia wird gezeigt, dass die unscharfe Umsetzung von Regeln, die dem Erhalt landwirtschaftlicher Flächen dienen, zu Spekulationsprämien führen, die auf eine spätere gewerbliche oder bauliche Nutzung derzeitiger Agrarflächen abzielen. Im Einzelfall kann der Preis landwirtschaftlicher Flächen, für die Marktakteure ein Entwicklungspotenzial sehen, bis zum Vierfachen des rein landwirtschaftlichen Wertes betragen.

Suggested Citation

  • Khalid, Haniza & Lloyd, Timothy Adrian & Morgan, Christopher Wyn, 2013. "The Impact of Economic Transformation and the Credibility of Planning Control on Agricultural Land Values," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 62(02), pages 1-12, May.
    • Handle: RePEc:ags:gjagec:232337
    DOI: 10.22004/ag.econ.232337
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    References listed on IDEAS

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